Wednesday, November 24, 2010

The European Travel Retail Council raises alarm over duty-free tobacco threat


The European Travel Retail Council (ETRC) has expressed its concern that a claim in the World Health Organization's (WHO) Tobacco Free Initiative technical report on price and taxation policies of the Framework Convention on Tobacco Control (FCTC) could threaten the future of duty-free tobacco sales. The report suggests that duty-free tobacco sales undermine national taxation policies, which could be indirectly used to attack the duty-free industry. It also claims that duty-free is a major source of illicit trade, tax avoidance and tax evasion.

ETRC secretary general Keith Spinks said: "These are claims made without any basis. Duty-free sales account for less than 1% of the global tobacco market. It is disingenuous in the extreme to suggest that with such limited presence, duty-free undermines national taxation policies. We anticipate the working group with begin its work in 2011 and the industry across the world will be responding accordingly."

The WHO working group, which was established to examine the use of price and taxation policies as a means to reduce the demand for tobacco following the fourth Conference of the Parties in Uruguay last week, will look to integrate finance ministries into tobacco control, an area typically reserved for health ministries. Its focus will be on areas raised by the WHO's Tobacco Free Initiative in its technical report.

The group will comprise representatives from five states from each of the WHO's six regions and function without a budget in 2011. It also faces substantial opposition from various EU countries which believe taxation should remain a matter for national governments.

In a further development, the WHO will hold the next round of negotiations on the Illicit Trade Protocol in early 2012. The ETRC and other stakeholder organisations have consistently defended the industry against claims that duty-free is a major source of illicit trade.