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Asia Pacific Tax Forum

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Tobacco Industry’s Hidden Agenda in the International Tax and Investment Center (ITIC)

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Covert Agenda, International Tax Organization It Must Caution, DEPOK – The government is asked to be aware of the movements of the International Tax and Investment Center (ITIC) for allegedly possessing a hidden agenda to influence the economic policies taken by the government.

Economist and Vice Chairman of the Institute of Demography, University of Indonesia Abdillah Ahsan said that the government should be careful on the recommendations given ITIC.

“The state can be used as a tool by the tobacco industry to make profits through tobacco control policies are weak, especially the tax policy is very effective to reduce consumption,” he said in an official statement received on Monday (05/23/2016).

Today, Monday (05/23/2016) 13th Annual Asia-Pacific Tax Forum was initiated by ITIC opened in Jakarta. Institutions which claims itself as a research and educational institute an independent nonprofit that claims will bring tax reform in Indonesia.

But, in fact, behind the ITIC approach to the Indonesian government, to infiltrate the hidden agenda of the tobacco industry.

Allegations of hidden agenda, especially on the issue of tobacco control, as in the case of tax / cigarette taxes, given what has been done ITIC in other countries.

Therefore, the government should not make a commitment on the ITIC. Tax reform is a record that should be reviewed, especially in the Tobacco Tax Section as it will sacrifice the people who become the target market for the benefit of cheap cigarettes industry.

Kartono Mohamad, Chairman of the Tobacco Control Support Center (TCSC) as well as Advisory Board Member National Commission on Tobacco Control ITIC said that what was done in the countries he approached actually just a camouflage for the hidden agenda that infiltrated the cigarette industry bigwigs.

According to him, it is one of their strategies in order to perpetuate its business in a subtle way.

“Government officials, especially in Kementeri Finance, potential to influence. It is very dangerous for tobacco control efforts in an attempt protection of people,” he said.

The statement also added that in 2015, ITIC met with Indonesian Vice President Jusuf Kalla. During the meeting, President of ITIC Daniel Witt gave the book Excise Tax in ASEAN: A Guide to Reform Ahead of AEC 2015 to the Vice President.

Witt says that the book discusses among others the implementation of customs clearance for cross-border trade, for example excise for commodities such as cigarettes, alcohol, and so on.

The book has also been given to the Finance Minister Bambang Brodjonegoro. It was supposed to be a first step ITIC approach to the Indonesian government.

The first thing that should be questioned, according to the ITIC is whether independent? In fact, on the board of directors ITIC stands four major tobacco industry, Philip Morris (PMI), Japan Tobacco International (JTI), British American Tobacco (BAT) and Imperial Tobacco.

Two years after being founded, ITIC revealed that they provide access or support in policy making for the sponsor, including the transnational tobacco companies.

ITIC has been lobbying various nations to oppose the tobacco tax policies. They make a tax manual which essentially facilitate the investment climate but tucked inside a chapter on tobacco tax.

“Will they clear, namely that the government did not raise high taxes on cigarettes, something which is contrary to international rules, including the World Bank.”

In May 2015, the World Bank withdraw financial backing for the 12st Annual Asia-Pacific Tax Forum in New Delhi, India, which is being organized by ITIC.

The World Bank refused to give support and the Indian government did not send top officials to the forum. All done for the protection of society by giving exemption on tobacco products.

Clear The Air on International Tax and Investment Center

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ITIC in Asia

ITIC And Its Activities

The International Tax and Investment Center (ITIC), a Washington D.C. based think tank that claims to be an independent, non-profit research and educational organization has Board of Directors from four transnational tobacco companies (BAT, PMI, JTI & ITL) which are also included in its list of funders.

In 2012, ITIC and Oxford Economics (OE) released a report on illicit tobacco trade, “Asia-11 Illicit Tobacco Indicator 2012” to provide evidences of illicit trade of tobacco products of 11 countries in Asia. ITIC later launched another report, “Asia-14 Illicit Tobacco Indicator 2013”, expanding the review to 14 countries in Asia. Recently, ITIC released “ASEAN Excise Tax Reform: A Resource Manual” as a tool for governments in Asia to implement tax policy including tobacco taxation policy. The reports and manual have been promoted and distributed throughout Asia, particularly to Ministries of Finance and Customs Departments.

ITIC and OE’s reports on illicit trade were funded by Philip Morris International and prepared according to Agreed terms of reference provided by Philip Morris Asia Ltd.

It aims to undermine in the WHO Framework Convention on Tobacco Control (FCTC) Article 6 on tobacco tax and price measures, which 180 governments worldwide have committed to implement.

In 2014, the ITIC organized a briefing for governments attending the COP6 session in Moscow hoping to influence them about their decision in adopting FCTC Article 6 guidelines on tax. The FCTC Convention Secretariat was able to warn governments just in time about this meeting.

ITIC’s 13th Asia-Pacific Tax Forum

The ITIC is holding its 13th Annual Asia-Pacific Tax Forum in Jakarta, on 23-25 May 2016. It has routinely invited government officials, especially from Finance and Customs departments, to attend its meetings. On its website and publications, the ITIC promotes photos of its executives posing with officials from Asia to illustrate its close association with Asian governments.

SEATCA’s Critiques To Counter ITIC’s Reports

1. ITIC’s Asia-11 Illicit Tobacco Indicator 2012: More Myth than Fact provides an expert review of the methodology of the Asia-11 report (which relies on litter surveys), questioning its reliability and accuracy of the estimates of illicit consumption.

2. A Critique of the ITIC/OE Asia-14 Illicit Tobacco Indicator 2013 points out that the Asia-14 report fails to provide scientifically sound and unbiased information to policy makers. The figures and statistics it reports are products of either incorrect or unverified/unverifiable estimation methods applied to often questionable data from multiple sources that do not blend.

3. Undermining Global Best Practice in Tobacco Taxation in the ASEAN Region: Review of the ITIC’s ASEAN Excise Tax Reform: A Resource Manual showed how the main principles and views that the Manual promotes often contradict its analysis and recommendations. The Manual warns against substantial tobacco tax increases, although some countries in the ASEAN region have successfully increased tax to reduce tobacco use while also boosting their tax revenues. It runs contrary to international best practices on tobacco taxation outlined in the Article 6 Guidelines of the WHO FCTC.

FCTC Convention Secretariat Action: Notes Verbale

The FCTC Convention Secretariat (FCS) refers to the ITIC as an organization that works to further the interest of the tobacco industry, having four international tobacco companies on its Board. The FCS has issued two Notes Verbale on Non-Engagement with ITIC to Parties to the WHO-FCTC. These Notes advise Parties not to engage with the ITIC as it works to promote the tobacco industry, and any engagement with ITIC will be damaging to our tobacco control efforts:

1. 4 March 2016: Note Verbale on tobacco industry interference on the tracking and tracing systems (including reference to regional meetings organized by ITIC)
2. 19 September 2014 Note Verbale on issues related to Article 5.3 and its guidelines (covering the pre-COP6 meeting organized by ITIC)


On April 21 2016, the Southeast Asia Tobacco Control Alliance (SEATCA) received a letter from Dr. Gary Johns, on behalf of his client the International Tax and Investment Center (ITIC). The letter is riddled with false accusations against SEATCA, mischaracterizations of fact and law, disparaging comments about the World Health Organization (WHO) and the FCTC Convention Secretariat (FCS) and the Parties to the FCTC. Because SEATCA does not engage with the tobacco industry and its representatives, it has decided to publish an open letter in response.


19 May 2016

Dr. Gary Johns,

Queensland, Australia

We are taken aback by the accusations hurled against our organization and we find unacceptable the disrespect shown to us. We feel it is necessary that this intimidation ceases and that the misinformation you conveyed is addressed.

The letter you wrote on behalf of ITIC contains false accusations against SEATCA, disparaging remarks about the World Health Organization (WHO)/ Framework Convention Secretariat (FCS), misinterpretations of facts and law, particularly of Article 5.3 of the WHO Framework Convention on Tobacco Control (FCTC), the first public health treaty negotiated under the auspices of the WHO.

You also used rulings/opinions from authorities of five governments, namely Philippines, Germany, India, Netherlands, and European Commission, to attempt to show that “the work of ITIC does not violate Article 5.3 and the Convention,” when none of these governments have in any manner, in these documents or elsewhere, made an official announcement to that effect.

Let me start by stating that SEATCA is a non-profit, civil society organization working to save lives from the many devastating harms of tobacco use. We take our work very seriously, because of the six million deaths (of which half a million are from the ASEAN region) caused annually by tobacco products that are made, promoted, and sold by profit-oriented tobacco companies.

On the other hand, it is quite plain to see that ITIC represents the interests of the tobacco industry. Aside from the fact that ITIC has a longstanding relationship with the tobacco industry (as documented on the University of Bath’s website) and that executive officials of the four largest multinational tobacco companies sit on the ITIC board of directors, ITIC has made statements and published reports that advance tobacco industry interests, and at least two of such reports were financed by Philip Morris International.

You asserted that “ITIC does not work on any public health issues” hence, its work on tobacco taxation does not take into account the World Bank’s identification of tobacco tax increases as a cost-effective measure for tobacco control and a key intervention for health outcomes. It completely ignores the fact that tobacco taxation had been classified as a public health issue by Parties to the FCTC. Disregarding the public health dimension of taxation as documented in the FCTC and its guidelines is an affront to the collective wisdom of the 180 governments that adopted the guidelines based on international best practice.

On behalf of ITIC, you asserted that SEATCA “inaccurately criticized the work of ITIC and mischaracterized its role”. You referred to our critiques as “false statements” and “mischaracterizes ITIC’s work.”

The critiques of ITIC’s three reports are well-researched, detailed, and as accurate as possible. These were written in collaboration with much-respected professionals. On this note, we want to point out the sheer inaccuracy of your statement: “Of 180 Parties to the Convention only 16 are signatories to the Protocol to Eliminate Illicit Trade in Tobacco Products.” Publicly available information shows that there are 54 signatories to the Protocol. And there is no mischaracterization of ITIC’s role because, as stated above, it represents the interests of the tobacco industry.

You alleged that “SEATCA is an opaque organization. There is no public document that displays your members, or your executive, or anything remotely suggesting good governance. There is no indication of your sources of income.”

Asserting that a civil society organization lacks transparency and accountability in the same breath as challenging the messages it sends is a distasteful way to silence civil society voices. We refuse to dignify this approach by providing you with organizational information but suffice it to say that you would have found all the information you needed if you looked in the right places.

You claimed that SEATCA “refused to operate in an open manner” and “operates under the false protection of Article 5.3 of the Convention, which, among other things, seeks to ’improve the transparency and accountability of policy-making in the tobacco control process’.”

SEATCA does not engage with the tobacco industry and its representatives. SEATCA’s decision is soundly based on the principle that there is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests, a guiding principle fully recognized by the 180 States Parties to the FCTC. This principle is the basis for the state’s obligation to protect tobacco control policies from the commercial and vested interests of the tobacco industry (FCTC’s Article 5.3).

SEATCA is actually open to discussion with partners other than the tobacco industry and those representing its interests in accordance FCTC’s Article 5.3. Referring to it as “false protection,” shows disregard for the treaty and the Parties’ commitment thereto. You also mention Article 5.3 Guideline’s transparency provision but left out the essence of it, which is to require transparency from the tobacco industry and from those who interact with it when strictly necessary for regulation.

You stated that SEATCA “sees itself as an instrument of the World Health Organization and its Framework Convention Secretariat.”

This statement undermines the credibility of many international and regional non-governmental groups that work closely with inter-governmental organizations. SEATCA is a civil society network that works independently of the WHO and FCS. The fact that SEATCA was granted observer status by the FCTC Conference of Parties (COP), like many other organizations, does not make it an instrument thereof.

Such a statement is also laden with innuendo that there is the possibility for the FCS to be treating civil society organizations as “instruments.” This type of reference could damage the reputation of the FCS as it undermines the trust and partnership developed by the FCS with CSOs over time.

In addition, the criticism you made of the WHO/FCS having “excluded reputable authorities such as Interpol from its illicit trade work” is actually a direct challenge to the judgment made by a body comprising of about 180 governments (the COP); for it is the COP that decided to defer reviewing Interpol’s application as observer due to the organization’s receipt of tobacco funding.

Finally, you claim that ITIC’s repeated attempts to engage were in good faith. And yet, by your own admission, you stated that ITIC’s aim was “to provide opportunities (for SEATCA) to rectify (its) comments and mischaracterization.” Attempts to engage with the intention of making the other party rectify supposed errors show prejudice and are not a manifestation of good faith.

SEATCA will not tolerate any more offensive statements. It is simply unacceptable for organizations representing the multinational corporate sector to intimidate civil society organizations that support government implementation of a human rights and public health treaty that aims to prevent deaths from a deadly product.


Ms.Bungon Ritthiphakdee
Executive Director

Address: Thakolsuk Place, Thod-dumri road, Dusit, Bangkok, 10200, Thailand.

Significance of Following Fair Trade Rules in Open Economy

Right from its initiation in early-90s, International Tax and Investment Center has hunted for the consistent ways, methodologies and mechanisms that can greet open trade practices in globalized economy. The Washington based group has strong belief that when it comes to global progression, each nation should trail their compulsion and step forward with a hearty business attitude. With a mutual understanding a comprehensive development is possible. To make sure conformity in trade practices worldwide, the International Tax and Investment Center Tobacco has initiated a series of brilliant measures.

Out of them one is the Regional Cooperation Agreements widely known as RECs which talks about the measures and practices that nations should undergo to welcome healthy trade systems globally. Interestingly, based on this mechanism the expert group has worked in collaboration with the ministers of finance, commerce and other public authorities of East African Community, Asian Economic Group Community, Eurasian Economic Community, and South-African Development Community and has guided them the ways following which they have gained trade practices and in finding investors

In reality, apart from the developing nations, even the highly developed or affluent countries cannot ignore the crucial factors like poverty, illiteracy or unemployment problems. By bringing in a comprehensive change in trade policies, as a national can encourage local business, it can also attract overseas as well as inland investors. Thus, with the growth in trade and commerce, it is possible to slow down the major issues and uplift the national income plus economy. The different ways International Tax and Investment Center extends its services are

o Working on a series of agenda in relation to tax structure including VAT, GST, levies like excise duty and allied ones; the International Tax and Investment Center is also activated to find great ways to invite fair business setting together with investment possibilities;

o Supports all client nations, affiliates and corporate business enterprises with expert advices that are entrenched in globally established healthy business practices and policies; Remains down-to-business to response appeals and demand-based requirements found from the public departments seeking for expert advices and solutions from ITIC

o Working untiringly to find ways out to discontinue unlawful business practices; a special pool of ITIC is prepared to stay watchful about the illegitimate transactions typically done in the boundary zones; it also alerts its associate nations as well, those who are not its members about these unfair deals

o Welcoming affiliates to share the Neutral Table platform with other bodies globally and helping them avail tangible benefits by joining its international forum.

The great approach of ITIC’s Solution Finding Triangle, branded as ‘NUTRAL TABLE’ has been globally accepted and is an established process which is capable to offer positive solutions. The first experiment of its research based solution was convened in Russia and then in Kazakhstan during 1990. The subject of the trial made was implementation of VAT and assessing its effectiveness. The experience was successful which strengthened the position of International Tax and Investment Center Tobacco in global market.

Q & A on the International Tax and Investment Center (ITIC)

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Open Letter to Gary Johns

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Official Note Verbale issued on TI Interference & ITIC

Has the International Tax and Investment Center (ITIC) been talking to your government? What recommendations has it been proposing? The FCTC Convention Secretariat (FCS) has issued a Note Verbale warning Parties about the ITIC and its activities, and to reject the tobacco industry’s interference in addressing tobacco smuggling problem.

The FCS has warned governments that the ITIC, which has 4 transnational tobacco companies on its Board, has been working to further the interest of the tobacco industry. The ITIC has been organising regional and global meetings where the meetings feature discussions on tobacco taxation and promote tax policies favouring the industry rather than the recommendations of the FCTC especially Article 6 and its Guidelines.

The ITIC will be holding its next annual Asia-Pacific Tax Forum in Jakarta, on 23-25 May 2016. It has routinely invited government officials, especially from customs departments, to attend its meetings. On its website and publications, the ITIC promotes photos of its own executives posing with officials from Asia to illustrate its close association with Asian governments.

Smuggling of tobacco is a problem is faced by many countries in the region. Big Tobacco (PMI, BAT, JTI and IB [Imperial Brands]) has blamed substantial excise tax increases and high tobacco taxes as the problem. Additionally, the industry promotes its own ‘Codentify’ system to solve the smuggling problem.

The FCS’s Note Verbale advices governments not to accept ‘Çodentify’ to address the illicit trade in tobacco products. The Note Verbale reminds Parties to “reject partnerships and non-binding or non-enforceable agreements with the tobacco industry”.

In addition, Article 8.12 of the Protocol on Elimination of Illicit Trade in Tobacco Products, explicitly states that a Party’s obligations shall not be performed by, or delegated to, the tobacco industry. An expert paper, The Tobacco Industry and the Illicit Trade in Tobacco Products provides further information on the tobacco industry’s behaviour in addressing tobacco smuggling.

For information on TI denormalization, check out SEATCA’s Tobacco Industry Watch website.