Tobacco Industry Strategies to Reduce Tax Liability

Abstract

Literature review and data collection from key stakeholders from low- and middle-income countries. The collected data were categorized and analyzed using an economic framework. I have identified six strategies used by tobacco companies to influence the debate about tobacco tax policies: messaging on negative effects of tobacco tax increases, negotiating tax road maps, threating to move business out of the country, demanding reduction or elimination of import tariffs, establishing a favorable tax climate as a condition for an investment, and direct lobbying. The messaging strategy has at least five different elements. The discussion of each strategy addresses the motivation for tobacco companies to engage in such strategies, the consequences of the strategy for governments and companies, and measures that governments can take to counter tobacco industry actions to undermine tobacco tax increases. Each strategy is illustrated with one or more country case studies. The article also focuses on illegal activities by the industry that reduce its tax liability and mitigate the impact of tax increases: illegal imports, illegal exports, and illegal production and sale. The tobacco industry often pulls together multiple strategies and adapts them over time for maximum impact. The governments can engage in monitoring and surveillance that will provide data for formulating effective responses to the industry's effort to reduce the impact of tobacco control.