Illegal cigarettes cost GCC governments $210m in lost taxes, says Philip Morris
Illegal cigarettes have cost GCC governments $210 million in lost revenue since excise tax was introduced in the region last year, according to a report by Marlboro manufacturer and global tobacco giant Philip Morris International (PMI).
The research, in collaboration with Oxford Economics, is aimed at monitoring consumption, sales and lost tax revenues as a result of the illicit trade of cigarettes in the GCC.
The rate of illegal cigarettes sold in the GCC in the first half of 2018 more than tripled, rising from 1.6% in 2017 to 5.3% of total sales consumed, according to the study.
While cigarette consumption has dropped in the region, illicit trade of the products has risen since the beginning of 2018, with Saudi Arabia having witnessed the largest increase at 6.6% of all cigarettes consumed are illicit.
Cigarette consumption in the kingdom fell from 34 billion in 2015 to 27.5bn in 2017, but illicit consumption increased from 484m cigarettes in 2016 to 571m cigarettes in 2017, the research shows.
It is likely to be even higher by the end of the year based on the 2018 Q2 empty packet survey conducted by Oxford Economics.
On the other hand, Kuwait saw the lowest levels of illicit trade in cigarettes in the GCC at just 1%, partly due to cigarettes being the some of the cheapest in the region.
Philip Morris International claims to be developing a smoke-free future which offers consumers better alternatives than cigarettes.
In July last year, the world’s largest publicly traded tobacco company urged consumers to “stop smoking” and switch to its smoke-free products.
The controversial firm had ventured into heated tobacco products in a bid to provide smokers with less harmful alternatives to traditional cigarettes.
“If you’re a smoker looking to improve your health, the best thing is to quit. But if you would otherwise continue smoking, all we want is for you to stop smoking and go to a smoke-free product,” Joshua Gideon Townsend, manager corporate affairs RRP, PMI, said at the time.