Levels and trends in cigarette contraband in Canada

Abstract

BackgroundThere is overwhelming evidence that increases in tobacco taxes reduce tobacco use, save lives and increase government tax revenue. High taxes, however, create an incentive to devise ways to avoid or evade tobacco taxes through contraband tobacco. The associated consequences are significant and call for an accurate measurement of contraband's magnitude. However, its illegal nature makes the levels and trends in contraband intrinsically difficult to measure accurately.ObjectiveTo examine levels and trends in cigarette contraband in Canada.MethodsWe employed 2 approaches: first, we contrasted estimates of tax-paid cigarettes sales with consumption estimates based on survey data; second, we used data from several individual-level surveys that examined smokers' purchasing and use behaviours. We placed a particular emphasis on the provinces of Québec and Ontario because existing research suggests that cigarette contraband levels are far higher than in any other province.ResultsThe estimates presented show a clear upward trend from the early 2000s in cigarette contraband in Québec and Ontario followed by, on the whole, a decreasing trend from about 2007 to 2009. None of the data presented provide support to the narrative that cigarette contraband has been increasing in recent years. Of note are Québec estimates which suggest relatively low levels of cigarette contraband since 2010, at levels no higher than in the early 2000s.ConclusionsThe data presented suggest that policies to tackle cigarette contraband introduced from the mid-2000s to late 2000s, at both federal and provincial levels, may have dampened the demand for contraband cigarettes.

Illicit cigarette trade in South Africa: 2002–2017

“…Guindon et al present trends in the illicit trade market in Quebec, Ontario and Canada for 1999-2013. 22 The authors also present estimates for illicit trade in Ontario using under-reporting levels of 35% and 40% for years they have information on under-reporting (2007,(2009)(2010)(2011). These levels were chosen as self-reported consumption represented about 65% and 60% of tax-paid consumption, depending on the data set used.…”

“…These levels were chosen as self-reported consumption represented about 65% and 60% of tax-paid consumption, depending on the data set used. 22 HMRC uses an 'uplift factor' to account for under-reporting. To quantify the under-reporting bias, the uplift factor is calculated by dividing total legitimate (ie, tax-paid) consumption by total self-reported consumption in a year when illicit trade is believed to be negligibly small (in which case under-reporting is the only unknown variable).…”

‘Both Sides of the Argument’? A critical review of existing evidence on the illicit trade in tobacco products in Canada

“…Thirteen studies (both independent and industry linked) provide estimates for Ontario, ranging from 11% to 51% of cigarettes consumed (figure 1). 48 49 The only independent study on contraband consumption across Canada estimates national consumption at 5% in 2013 48. This estimate 48 is much lower than the industry-linked estimate (15%)50 for the same year.…”

“…48 49 The only independent study on contraband consumption across Canada estimates national consumption at 5% in 2013 48. This estimate 48 is much lower than the industry-linked estimate (15%)50 for the same year. Similarly, the most recent (2013) independent estimate for Ontario of 11%48 is lower than an estimate (31%) from an industry-linked source 30…”

“…Few studies reviewed applied mixed methods, the approach recommended by research guides 3 27 28. These include the independent analyses by Guindon et al 48 and the OTRU report discussed above,36 both of which combined survey and residual analysis. The industry-funded GfK and KPMG studies apply mixed methods but do not provide sufficient detail to allow validation of their methodology 20 21 29 30…”