Tax rates and illicit tobacco

From: American Enterprise Institute

Earlier this month my colleagues Aparna Mathur, Cody Kallen, and I published a working paper on illicit tobacco.

As authorities around the world have increased taxes on tobacco products in order to reduce smoking, illicit (untaxed) tobacco use has increased. Manufacturers (some criminal by design, others weakly enforcing rules to their advantage) make products, known as illicit whites, legally in jurisdictions like Dubai or Paraguay and then smuggle them into markets where they have paid no tax, and may not contain any of the important warning labels.

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