We are writing to you on behalf of Oxford Economics and the International Tax and Investment Center (ITIC) regarding the article “Report ‘One in three cigarettes illegal’ findings questioned by experts” published on 5 November in the Macau Daily Times.
By its very nature, measuring illicit trade in any good or service is an imperfect science. However, you cannot successfully combat any illegal activity without first identifying where the problem lies. To this end, the purpose of the Asia Illicit Tobacco Indicator series is to provide policymakers and administrators an objective and independent annual benchmark on illicit tobacco trade and its impact on government revenues.
The methodology employed for the Asia Illicit Tobacco Indicator series was developed following a thorough review of alternative methods as detailed in the wider economic literature, and all available data in the individual markets covered in the report. It is our opinion that the Empty Pack Survey is the most unbiased and robust method for estimating illicit tobacco consumption, and therefore represents the preferred method used in the Asia Illicit Tobacco Indicator series, including in Macau. The results from the Empty Pack Survey are augmented with our own conservative estimates on the volume of legal non-domestic cigarettes consumed, in order to estimate the total volume of illicit consumption in each market. For more information, and in a desire to be open and transparent, we continue to expand on the detailed Annex pages that accompany all our reports, and we encourage you to review these in detail.
We have always been upfront about how the research is funded, and as independent organizations, we have maintained full editorial control throughout.
Furthermore, we welcome open debate on the subject and reiterate our desire to engage with any interested stakeholders to share experience and best practices in measuring illicit trade, and raise awareness of what we can all agree is a serious issue across Asia. Indeed, in relation to the comments detailed in your 5 November article, we have previously contacted SEATCA in a bid to facilitate this discussion.
A reduction in the level of illicit tobacco trade across Asia would benefit all interested stakeholders, including legitimate tax-paying manufacturers, as well as government and public health officials, and the wider general public. As such, we thank you for your interest in our research, and if you have any questions, please do not hesitate to get in contact.
Managing Director, Macroeconomic and Industry Services, Oxford Economics
Daniel A. Witt, President, International Tax and Investment Center