Due to its nature, it is very hard to measure tobacco illicit trade in any product. In the case of Latin American countries, there is scant information on the magnitude and characteristics of this trade in the case of cigarettes. The goal of this article is to provide estimates on the evolution of the illicit cigarette trade in five South American countries: Argentina, Brazil, Chile, Colombia and Peru.
Gap analysis estimates for cigarette tax evasion/avoidance (a comparison on the evolution of the difference between registered cigarette sales and measured population consumption) is developed for Argentina, Brazil, Chile, Colombia and Peru. Nationally representative surveys, conducted regularly, are used to measure population consumption. Confidence intervals constructed by bootstrapping sample estimates are generated in order to statistically evaluate the evolution of the gap.
Cigarette illicit trade has increased as a percentage of total sales in Brazil in recent years. In the case of Argentina, after a relative decrease between 2005 and 2009 it seems to have stabilized. There is no statistical evidence to argue that there has been an increase of cigarette illicit trade in Chile, Colombia and Peru, despite substantial price increases in Chile and tax increase in both Colombia and Peru.
Using simple statistical methods, it is possible to assess the trend in tobacco illicit trend over time to better inform policy-makers. Getting reliable and regular population consumption surveys can also help to track tobacco illicit trade. Claims by tobacco industry of a positive association between price/tax changes and illicit trade are unsubstantiated.
Evolution of cigarette illicit trade in five Latin American countries show different trajectories, not in line with tobacco industry estimates, which highlight the importance of producing solid, independent estimates. There are inexpensive methodologies that can provide estimates of the evolution of the relative importance of illicit trade and can be used to inform policy-makers. Claims by tobacco industry of a positive association between price/tax changes and illicit trade are unsubstantiated.