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Review of ITIC’s ASEAN Excise Tax Reform: A Resource Manual

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Industry-funded Report on Illicit Trade in South East Asia Lacks Credibility

RESEARCH ALERT

Late last year, the International Tax and Investment Center (ITIC) and Oxford Economics released a report on illicit trade in tobacco products in 14 countries in Asia. The report was a follow-up to their 2012 attempt to estimate the scope and composition of illicit tobacco consumption in Asia. The South East Asia Tobacco Control Alliance (SEATCA) recently assessed the quality of the new report in Failed: A Critique of the ITIC/OE Asia-14 Illicit Tobacco Indicator 2013. The SEATCA critique examines the methods and data used in ITIC report, concluding that the report lacks integrity and is biased. The problems in the ITIC report, which was funded by the multinational tobacco company Phillip Morris International, fall into four general categories: methods and data issues, lack of sufficient detail to permit assessment and replication, selective presentation of results, and mistakes and errors.

Key Findings

The SEATCA critique found numerous deficiencies in the ITIC report. Among them are:

Different sources and methods are used across countries, leading to results that are not comparable to one another, yet presented for comparison.
No rationale is given for including or excluding countries from coverage in the report.
Many of the methods used to measure illicit trade in the countries are either weak or lack enough detail to allow for a judgement about their strength.
The quality of the original data collected is questionable because it is not representative and could be intentionally biased.
Many secondary data come from sources with an obvious conflict of interest; for example, the tobacco industry.
The findings are selectively presented. The report highlights examples of increasing illicit consumption while neglecting to point out examples of declines or where there have been no changes in markets.
The report contains many errors and mistakes. For example, it fails to distinguish smoking incidence (how many people per year begin to smoke) and smoking prevalence (the proportion of the population that smokes), even though these are two very different concepts.

Key Messages

Policymakers should reject the ITIC/OE Asia-11 report because it is not an independent study, uses flawed methodology, and results in skewed findings supportive of the tobacco industry positions on taxation.

Countries should implement Article 5.3 Guidelines of the Framework Convention on Tobacco Control and reject any partnership with the tobacco industry and its representatives in tackling the illicit tobacco trade problem.

Countries should step-up enforcement to reduce illicit tobacco trade.

Countries should ratify the Protocol on Illicit Trade of Tobacco Products.

Full Citation: Southeast Asia Tobacco Control Alliance (SEATCA). Failed: A Critique of the ITIC/OE Asia-14 Illicit Tobacco Indicator 2013. Bangkok: SEATCA. June 2015.

Full text [ENGLISH ONLY] available at: http://seatca.org/dmdocuments/Asia%2014%20Critique_Final_20May2015.pdf

SEATCA is a multi-sectoral alliance established to support ASEAN countries in developing and putting in place effective tobacco control policies.

If you have questions about the report, please email author Hana Ross at hzarub1@yahoo.com or SEATCA Research Coordinator Sophapan Ratanachena at sophapan@seatca.org.

Government officials should not endorse any event funded by tobacco industry

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Big tobacco quietly battling religious opposition to smoking in key Muslim markets: Canadian study

http://news.nationalpost.com/news/world/big-tobacco-quietly-counteracting-religious-opposition-to-smoking-in-key-muslim-markets-canadian-study

The tobacco industry has been waging a sort of religious war for decades, recruiting Islamic scholars and crafting theological arguments to counter a feared Muslim opposition to smoking, a new, Canadian co-authored study suggests.

The companies’ tactics have included courting Muslim experts at McGill University and portraying religious objections to tobacco as a form of extremism – at odds with freedom and modernism generally, the analysis of years of industry documents reveals.

“The industry has sought to distort and misinterpret the cultural beliefs of these communities, and to reinterpret them to serve the industry’s interests,” charges Kelley Lee, a global health-policy expert at Vancouver’s Simon Fraser University and one of the authors of the study. “All to sell a product that kills half of its customers.”

With smoking on the decline in the West, Muslim countries in the Middle East and southeast Asia are among the most important markets for the sector, notes Prof. Lee.

Yet for at least three decades, companies have fretted about the menace posed by Muslim ideology in those places, memos and reports unearthed by Prof. Lee and her colleagues indicate. A 1996 British American Tobacco (BAT) document, for instance, describes the “Islamic threat,” including rising fundamentalism, as a “real danger” to the industry.

“This amounts to us having to prepare to fight a hurricane,” the memo warns.

An industry-linked law firm’s presentation proposed a theological retort to such pressures. The Koran does not actually prohibit use of tobacco, and “making rules beyond what Allah has allowed is a sin in itself,” the firm advised.

The study suggests Muslim thinking on the topic has changed over the years, but because of health reasons, not growing conservativism. Muslim jurists in the past generally considered tobacco use neutral, but as its risks became better known, some proclaimed it “markrooh” – discouraged – or even “haram” – prohibited, the paper says.

The material outlined in the study was drawn from the Legacy Tobacco Documents Library, a database of 15 million internal industry documents filed during lawsuits by U.S. states, most before 1998.

While the library did not provide access to the most recent documents, evidence suggests the companies are still trying to influence Muslim religious currents, said Prof. Lee, formerly with the U.K.’s London School of Hygiene and Tropical Medicine. A recent ad for Gauloises cigarettes in Qatar, for instance, depicts an Arab-looking woman without a headscarf, the tagline saying “Freedom Always.”

Bodies like the World Health Organization need to refute the industry-promoted idea that tobacco use in Muslim countries is an expression of escape from religious constraints, especially for women, the authors suggest.

Whether because of its religious-based strategies or not, the industry does appear to have thrived in many Muslim countries. While BAT sold fewer cigarettes worldwide in 2014 than the year before, the number increased in six countries, including Muslim Bangladesh, Iran, Turkey and Pakistan, a company report said.

The internal industry documents showed that companies first recognized in the 1970s that Islam posed a threat to expansion in such regions – a “formidable obstacle to the industry,” as one 1991 memo said.

This amounts to us having to prepare to fight a hurricane

The industry began years ago depicting that kind of stance as extremist, and suggested that even the WHO was part of the movement. The UN agency has “joined forces with Muslim fundamentalists who view smoking as evil,” complained one Philip Morris document. A BAT report in 2000 suggested the WHO’s efforts to link smoking and Islam had borne fruit and needed to be “managed.”

A tobacco lobbyist told Philip Morris in 1985 to portray anti-smoking Muslims as fundamentalists, and suggest their strict reading of Sharia law would lead to other curbs on modern living.

A consultant told BAT in a 1987 letter that he had repeatedly managed to stop a Muslim government from issuing booklets that linked an anti-smoking message to verses of the Koran. “Once the religious aspect is conveyed to the public … it will be very difficult to reverse the situation,” he warned.

A Philip Morris document from the same year relates how a representative of the Canadian Tobacco Manufacturers’ Council was contacting McGill University’s Islamic studies department to seek out academics who would refute any suggestion the Koran forbids smoking.

BAT approached Cairo’s Al Azhar University in 1996 to enlist scholars “as our authoritative advisers/allies and occasionally spokespersons on the issue.” But a memo mentioning the initiative urged caution.

“This is an issue to be handled extremely gingerly and sensitively,” it said. “We have to avoid all possibilities of a backlash

Interview with Dr. Tara Singh Bam, Regional Advisor for The Union

Creating a common market in South East Asia – which way for tobacco?

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Cigarette price level and variation in five Southeast Asian countries

http://tobaccocontrol.bmj.com/content/early/2014/02/05/tobaccocontrol-2013-051184

Abstract

Objectives

To monitor and analyse impacts of the interaction between tobacco excise tax policy and industry price strategy, on the price level and variation of cigarettes sold in five Southeast Asian countries (Indonesia, Cambodia, Lao PDR, the Philippines and Vietnam).

Methods

Prices of cigarette sold by sticks and packs were collected through an in-person survey of retailers during 2011. Mean cigarette prices and price variation were calculated in each study country for single cigarettes, whole packs and brand groups.

Results

Price variation of whole packs was greater in countries with ad-valorem excise tax structures (Cambodia, Lao PDR and Vietnam) than in countries with multitiered specific excise taxes (Indonesia and the Philippines). The price variation for single sticks appeared to be driven by local currency denomination. Cigarettes sold individually cost more per stick than cigarettes sold in whole packs in every brand group except for Indonesia’s domestic brands.

Conclusions

Tobacco industry strategy and excise tax structure drove the price level and variation of cigarettes sold in packs, while currency denominations influence the selling price of single sticks. To maximise the effectiveness of tobacco tax policies, countries should adopt specific excise tax structures to decrease cigarette price variation, which would minimise opportunities for smokers to ‘trade down’ to a cheaper brand to avoid a tax-driven price increase.

Tobacco Industry Interference Index Article 5.3

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