The lockdown measures during the COVID-19 pandemic distorted international trade. EU retailers benefited from short-term blocks to illicit cross-border movements, but national measures elsewhere had unexpected side effects, creating new opportunities for tax fraud. The crisis highlights the impact of the parallel trade on essential public health policies that depend on taxes to reduce smoking incidence. Secure tax stamps have proven their worth in protecting tax revenues and combatting fraud. Strong regulatory measures are vital, including tax stamps and full implementation of the track and trace provisions of the WHO Protocol to Eliminate Illicit Trade in Tobacco Products, which aims to provide supply chain transparency and identify weak links enforcement authorities can close.
The measures in the WHO Protocol are binding, but there is not yet agreement among the Parties on the technical implementation detail, including the working of the GISFP. The International Tax Stamp Association, a non-profit association independent of the tobacco industry, published a blueprint to guide system definition. Tobacco track and trace is complex, but ITSA members have deep expertise based on real-life experiences. The blueprint explains ten best practices, setting out the limited number of tasks that can be undertaken by the tobacco industry itself, whilst respecting the Protocol. End-to-end control across borders is needed, without unnecessary modularisation that can be exploited by the unscrupulous, particularly in developing countries where resources are lacking.
Countries now need to maximise revenue mobilisation to finance the costs of the pandemic and enable recovery – by reducing