New Zealand - report on illicit trade and options to control growth of illicit trade..

July 16, 2010 - Tax on tobacco in New Zealand has recently increased and will continue to increase over the next two years. Several additional measures to reduce the availability of tobacco are proposed for New Zealand.

Increasing tobacco tax and restricting supply are likely to increase illicit trade. Illicit trade of tobacco includes both tobacco smuggling (products illegally traded across borders) and illicit tobacco manufacturing (illegally manufactured products). Tobacco use is the single biggest cause of preventable death in New Zealand. This report explores the level of illicit trade in New Zealand, and options to control the growth of illicit trade alongside strong, effective regulation of smoked tobacco in New Zealand.

This report is based on information provided in reports, journals, interviews and personal communication with New Zealand Customs staff and health advocates and researchers with experience in illicit trade.

Key Points at a Glance

Illicit tobacco in New Zealand
• Availability of legal tobacco is a major cause of pain, suffering and preventable death in New Zealand
• Illicit trade reduces Government revenue and provides funds for organised crime and corruption. However illicit trade
in New Zealand is a relatively minor problem: it constitutes only 0.7 to 2.0% of total tobacco consumption in New Zealand.
• Tax on New Zealand tobacco is amongst the highest in the world and New Zealand has one of the lowest estimates of illicit tobacco consumption in the world. Price and availability are not the only factors determining the levels of illicit trade.
• New Zealand’s geographical location, population size and limited demand for tobacco compared to other markets means that conditions for illicit trade to flourish are unfavourable.

International factors
• Tobacco smuggling is more prolific in lower income countries than middle to high income countries.
• Case studies around the world during the last decade show that a combination of measures can lead to positive results
in tackling large-scale smuggling operations. Countries that are signatories to the FCTC are in the process of agreeing
to a new treaty containing numerous measures that will tackle illicit tobacco trade across the globe. No country on its
own is able to efficiently combat large-scale smuggling operations. Support from New Zealand for an effective protocol is extremely important.

Tobacco industry conduct
• Tobacco companies have benefited from and have been found guilty of involvement in illicit trade in a number of jurisdictions.
• Tobacco companies play on fears about illicit trade and exaggerate impacts by presenting the issues out of context in
two main ways. Firstly they don’t acknowledge the more substantial problem of legal tobacco use. Secondly they don’t
acknowledge effective measures and how these measures will reduce demand for illicit product.

Recommendations

• New Zealand’s high levels of co-operation with other countries, the high integrity and efficiency of New Zealand Customs and reducing demand for tobacco has been, and will continue to be, the key to maintaining a low level of illicit consumption.
• A number of different methods and data sources are available to monitor illicit trade. Attention to consistency of methods will enable changes in the level of illicit trade to be detected and managed. Improved monitoring could be achieved via additional questions in existing national tobacco use surveys.
• Increasing resources to NZ Customs to monitor and intercept illicit product is a cost effective way to protect and increase excise revenue.
• Duty free tobacco is a large source of New Zealand’s non-duty paid tobacco.
Removing duty free allowances would have a significant impact on reducing illicit trade.
• Ensuring the basis and the evidence supporting tobacco control measures are clear and engage public support is crucial. Measures that are perceived as unreasonable have potential to increase tolerance of illicit trade.

Reference: New Zealand - ASH Year 10 Snapshot Survey - Dramatic youth smoking decline, Dr Janine Paynter, Research and policy analyst, Esther U, Campaign Officer Action on Smoking and Health, Auckland, New Zealand Luk Joossens International expert on illicit tobacco trade, Framework Convention Alliance, Advocacy Officer, European Cancer Leagues, Tobacco Control Expert, Belgian Foundation against Cancer, 6/2010.

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