1. Tobacco Taxation and Combating Illicit Trade of Tobacco: Lessons Learned
Volkan Çetinkaya
Senior Economist

2. Turkey’s Fight Against Tobacco
CONTENTS
Turkey’s Fight Against Tobacco
Turkey’s Fight Against Tobacco
Tobacco Taxation in Turkey
Illicit Tobacco Trade
Conclusion

3. Tobacco Industry in Turkey
tobacco growers
9,5 billion USD tax revenues
8% of all tax revenues
7th biggest market
No state monopoly
Tobacco Control Activities in Turkey

4. Burden of Tobacco Consumption
More than people die every year due to diseases related to tobacco use (a quarter of all deaths);
¼ of population smokes (about 20 million people);
20 million smokers spend
12 billion USD on tobacco products
~ four times the annual budget of the Ministry of Health
Tobacco Control Activities in Turkey

5. Fight Against Tobacco: Story of Commitment and Leadership*
As part of the Multi-Sectoral Government approach against tobacco initiative, Ministry of Health, Ministry of Interior Affairs, Ministry of Customs and Trade, Ministry of Finance, universities, and NGOs worked together

6. Key milestones on Tobacco Control in Turkey
First tobacco control Law 4207 on Prevention of Harms of Tobacco Products (limited effects)
November Turkey ratified WHO Framework Convention on Tobacco Control (FCTC)
May Law implemented for public workplaces
July % smoke-free law implemented including hospitality sectors
May Health warnings on cigarette packages (combined text and graphic warnings)
October 2010 – Smoking cessation service launched including 171 Quitline and free distribution of medications
October Increase of tobacco excise taxes for tobacco products (80,5% of tax) (20 Marlboro 85 =
5.33$)
July 2012 – Total ban on advertisement (including brand sharing and brand stretching) and increase pictorial health warnings to at least 65% of both sides
June Turkey is the first and the only country in the world to attain the highest implementation
score for all of WHO’s FCTC and MPOWER measures.”
November Protocol to Eliminate Illicit Trade in Tobacco Products’ signed by Council of Ministers and sent Parliament for Ratification
January 2015 – New National Tobacco Control Programme and Plan of Action (Plain packaging and out door smoking bans)
January 2017 – Plain package implementation (banning the use of the cigarette brands on packages)
Stores will no longer be able to display tobacco products as all such items will be stored in closed containers which will not be see through.
Tobacco Control Actives in Turkey

7. Tobacco Taxation in Turkey
CONTENTS
Turkey’s Fight Against Tobacco
Tobacco Taxation in Turkey
Illicit Tobacco Trade
Conclusion
Tobacco Taxation in Turkey

8. Turkey has one of the highest tobacco taxes in ECA
WHO Report on the Global Tobacco Epidemic, 2015

9. Turkey lowered per-capita consumption (24%) while increasing tobacco tax revenue significantly (281%)
Tax Revenue (in billions TL)
Per-capita consumption
According to Global Adult Tobacco Surveys, percentage of population who smoke declined from 31.2% in 2008 to 27% in 2012
There is 60 percent increase in Tobacco Tax Revenue in real terms (2003 prices)

10. Illicit Tobacco Trade CONTENTS Turkey’s Fight Against Tobacco
Tobacco Taxation in Turkey
Illicit Tobacco Trade
Conclusion
Illicit Tobacco Trade

11. Fight against Illicit Trade
Illicit tobacco trade is a multidimensional and multiplayer process
negatively impacts the country in economic and social terms
varies greatly in terms of the commercial products the methods used
Therefore, periodic increases and decreases may be observed
Smuggling crimes are committed either directly through border violations, or by irregularities or forgery during customs transactions.

12. Causes of Illicit Trade
Lax Law Enforcement and Insufficient Penalties
Weaknesses in the Transit System
Informal Distribution Networks
Cross-Border Price Differentials
Duty-Free Sales
Lack of Resources
Lack of Effective International Cooperation

13. Illicit Tobacco Trade in Turkey
Smuggled cigarettes, especially smuggled through Turkey’s Eastern and Southeastern borders, and distributed within Turkey in trailer trucks with a fake seal and hidden in or under all kinds of goods.
Ministry of Health, Ministry of Interior Affairs, Ministry of Customs, and Ministry of Finance worked together to combat the illicit tobacco trade.
2015 Turkish Report of Anti-Smuggling and Organized Crime, Ministry of Interior

14. How did Turkey combat the Illicit Trade problem?
In 2007, a digital tax-stamp system implemented
using invisible ink and featuring a unique, covert code with product data for each cigarette pack
Standard tax stamp provides only product security
Digital tax stamp helps with tax revenue planning, improves accounting control, and contributes to tobacco control policy, as well
Initiation of online "Monitoring/Tracking System for Products with Tax Stamps"
prohibition of keeping products without tax stamp in the market
Modernization of public entities

15. Turkey increased efforts against illicit trade while increasing taxes
143.4 million packs of smuggled cigarettes in 2015.
It is estimated that the tax loss resulting from smuggled cigarettes seized would have been approximately 800 million Turkish Lira
(~265 million USD—2.8% of revenues from tobacco taxes)
6.5 million
100 million
3.5 % points
3.4 % points
2015 Turkish Report of Anti-Smuggling and Organized Crime, Ministry of Interior

16. Conclusion CONTENTS Turkey’s Fight Against Tobacco
Tobacco Taxation in Turkey
Illicit Tobacco Trade
Conclusion
Conclusion

17. Conclusion
Fighting successfully against tobacco requires Multi-Sectoral approach, Commitment, and Leadership
Taxation is the most cost effective way to fight against tobacco
Illicit Tobacco trade is an international problem requiring a global response
Lax law enforcement, insufficient penalties, lack of effective international cooperation are main drivers of Illicit Tobacco trade; NOT high tobacco taxes
Illegal trade activities can be controlled by strengthening the capacity of tax administration systems, focusing on both on
legal means such as use of prominent tax stamps, serial numbers, special package markings, health warning labels in local languages, adoption of uniform tax rates nationwide that facilitate successful collection at the points of manufacture and import)
increasing law enforcement including improving corporate auditing, better trace and tracking systems, and good governance

18. Thank you!