Session Leader: Frank Chaloupka
Professor of Economics
Department of Economics (M/C 144)
University of Illinois at Chicago
Presentation Background: Tax avoidance and tax evasion can decrease economic welfare by making tobacco products more affordable and available, thus exacerbating the negative health consequences resulting from tobacco use. Furthermore, tax avoidance and tax evasion can undermine the impact of tobacco control measures, primarily tobacco tax policies. The existence of illicit tobacco trade has been used to increase political pressure on governments and discourage them from adopting and implementing effective tobacco tax strategy. Moreover, illicit tobacco trade can channel sales proceeds to organized crime and lead to a loss in government tobacco tax revenues. This presentation reviews and summarizes the research evidence related to tobacco tax avoidance and tobacco tax evasion from the published literature and empirical evidence, as assessed by the Working Group for the International Agency for Research on Cancer’s Handbook on the Effectiveness of Tax and Price Policies for Tobacco Control (Handbook 14 in IARC’s Handbooks in Cancer Control series, published in late 2011). First, the differences between tax avoidance and tax evasion are described and the activities that fall into each category defined, with a brief review of the methods used in measuring the extent of each. This is followed by a discussion of the motivations for and determinants of tax avoidance and tax evasion. A review of recent estimates of the extent of tax evasion globally, regionally and in selected countries is then provided and the impact of tax avoidance and tax evasion on smoking prevalence, smoking intensity and disparities in tobacco use is discussed. The presentation closes with a summary of the Working Group’s assessment of the evidence on tax avoidance, tax evasion, and tobacco control.
Bio: Frank J. Chaloupka is Director of the WHO Collaborating Centre on The Economics of Tobacco and Tobacco Control, Director of ImpacTeen: A Policy Research Partnership for Healthier Youth Behavior and Co-Director of the International Tobacco Evidence Network. His tobacco control research has focused on the effects of prices and substance control policies on cigarette smoking and other tobacco use, alcohol use and abuse, and illicit drug use, as well as on various outcomes related to substance use and abuse. In 2011, he received the Society for Research on Nicotine and Tobacco’s John Slade Award .
Director of the National Poison Centre
Universiti Sains Malaysia
Presentation Background: Recently, cigarette smuggling in Malaysia is said to be the highest in the world. The Confederation of Malaysian Tobacco Manufacturers (CMTM) reported smuggling rate of 37.5% in 2009 and 36% in 2010 compared to 20% in 2003. These data are used by the industries to warn governments about further raising tobacco tax. Independent and reliable researches on use of illicit cigarettes are very much-needed to counter industries claims. This paper presents the approach to examine and refute the claims made by the industry and highlights the strength of the ITC methodology and results of the ITC investigation in addressing this issue.
Bio: Rahmat Awang is the founder and former Director of the National Poison Centre, Universiti Sains Malaysia. He is currently a Professor at the National Poison Centre, the Head of the WHO Collaborating Centre for Drug Information, and the Coordinator for the Clearinghouse for Tobacco Control. He is a Core Member of the Southeast Asia Tobacco Control Alliance and is a representative for the country in the Alliance regional meetings involving the ASEAN nations. He is also a the Principal Investigator of the Malaysian Arm for the ITC Project. His involvement in tobacco control research has helped advanced tobacco control policies in Malaysia such as the implementation of graphic health warning on Malaysian cigarette packs, extension of public smoke-free areas, raising of tobacco tax and provision of cessation services such as Quitline and Helpline. Besides teaching and supervising students at post-graduate levels, he is actively involved in training, capacity building and networking to source potential research and projects partners. Currently he serves as a Board Member to the Malaysian Health Promotion Board (MySihat) and Chairman of the Health Promotion Technical Committee where tobacco control is identified as a priority area for action by MySihat.
Coordinator, Tobacco Control Economics
World Health Organization
Presentation Background:I will focus on policies/practices to curb tax avoidance and evasion from a number of countries evidence where I will base my presentation to the WHO tax manual and INB discussions about an anti-smuggling protocol for the WHO FCTC. I will first discuss the tax avoidance issues that a number of countries had experienced and have been facing due to their tax systems and the solutions they choose to reduce it. Then I will discuss tax evasion issues and the governments’ responses to address the evasion issue. Finally I will discuss about the ongoing INB negotiations for the illicit trade on tobacco where the 5th session will take place in March 2-4, 2012 in Geneva.
Bio: Ayda Yurekli has been the Coordinator for the Tobacco Control Economics (TCE) unit within Tobacco Free Initiative at the World Health Organization since 2010. Dr. Yurekli received her BA in Economics from Marmara University in Istanbul, Turkey, and post-graduate degrees on economics from California Polytechnic University at Pomona (MA degree) and Cornell University (PhD degree) in Ithaca, New York. She completed her Post Doc at the Office of Smoking and Health (OSH) at the Centres for Disease Control and Prevention Centre (CDC) in Atlanta, Georgia between 1996 and 1998, and joined the World Bank, Washington DC and worked as tobacco economists until 2004. Between 2004 and 2006, Dr. Yurekli served as a Consultant for the World Bank and WHO, before joining to the Research for International Tobacco Control (RITC) unit at the International Development Research Center (IDRC), Ottawa Canada as a Program Leader in 2006-07. In 2007, Dr Yurekli joined the TFI, WHO as the Lead Economist and the Senior Economic Adviser for the Director of the WHO/TFI. Dr. Yurekli has experience in various issues on the economics of tobacco control issues, including excise tax systems, tax avoidance and evasion, price policies and tax administration. In recent years, she has been exclusively working with a number of countries Ministries of Finances in order to improve the efficiency and effectiveness of their excise tax systems, strengthen the technical capacity of tax administrators and address the tax system-induced tax avoidance issues.