Regulation

Tobacco consumption poses risks to health, so we agree that tobacco products should be regulated in appropriate ways.

At BAT, we are committed to supporting genuine efforts to implement balanced tobacco regulation not only through efforts to ensure compliance but also by providing advice and sharing its experience with the relevant authorities.

We have always been clear that we support regulation that is based on robust evidence and thorough research, respects legal rights and livelihoods and delivers on the intended policy aims, while recognising unintended consequences. We want to contribute to the debate by offering information, ideas and practical steps to help regulators address the key issues facing the industry, especially as some regulations can also have unwelcome and unexpected consequences. For example, sudden and significant hikes in excise rates can result in price disparities between neighbouring countries, thereby increasing smuggling across borders. It is generally accepted that there is a direct correlation between steep and ad hoc increases in taxes and an increase in illicit sales, with the current sanctions in many countries doing little to deter criminals for whom profits from the illegal sale of tobacco remain an appealing prospect. For example, following successive excise increases, the Australasia region has seen legal volumes decline substantially.

Tobacco is one of the world’s most regulated and most taxed industries, contributing in excess of $200 billion to government treasuries each year. Manufacturers are required to comply with a swath of regulations that vary considerably across markets. Legislation and subsequent regulation have been focused mainly on the introduction of plain packaging, product-specific regulation, graphic health warnings on packs, tougher restrictions on smoking in enclosed public places and bans on shops displaying tobacco products at the point of sale. In more recent years, governments have begun considering and adopting regulations aimed at menthol flavourings, as well as environmental concerns resulting from the litter associated with cigarette consumption.

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