High taxes on smoking promote illicit tobacco. Smuggling major brands from low tax areas, like South Carolina, to high tax areas, like New York, has taken place for years. But today new players, legally producing in places like Paraguay and Belarus, are smuggling their products, known as illicit whites, all over the globe.
As I document in my paper out last week, the World Health Organization (WHO), which meets this week in Washington DC, is trying to combat this illicit trade. It will be hard to stop. I asked smokers in London and Buenos Aires whether they ever bought these products: roughly a fifth had. In addition, my research team found that illicit whites were easily available in all ten cities we assessed. The poorer the city the more likely one could buy illicit whites. In richer cities, where customs and police prevent easy access to illicit whites, people are buying more raw tobacco and rolling their own. Perhaps the most interesting finding is that a significant minority of smokers are annoyed about high tax rates and happy to buy illicit products (often three or even four times cheaper).
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