Corporate Social Responsibility
To undermine tobacco excise tax policies and marketing and trade restrictions and thereby increase profits.
The idea that tobacco companies might facilitate the smuggling of their own cigarettes or rolling tobacco might seem strange, but this is what has been occurring for the past two decades. Internal company documents reveal that smuggling became an integral part of tobacco companies' business strategies. By the late 1990s, it was estimated that one third of global annual cigarette exports could not be accounted for via legal distribution routes. Although the amount of genuine cigarettes being smuggled in Europe has fallen over the past decade, smuggling remains a serious problem.
- A list of pages in the TobaccoTactics category Smuggling
Why Would Tobacco Companies Smuggle their Own Product?
Historically the tobacco industry has benefited from smuggling in the following ways:
- the tobacco companies are still paid for the smuggled product and can sell large volumes that enter the illegal distribution chain
- the reduced average market price as a result of smuggling increases total sales
- certain smokers (particularly the poor) may be “protected” from quitting by prices remaining low
- smuggling is used to press the case for reduced excise taxes, leading to increased demand in the legal markets.
"We Need a Review of Tobacco Taxes"
For example in the late 1990s at the height of an explosion of tobacco smuggling into the UK facilitated by the tobacco manufacturers, Gallaher's public relations team gave a presentation to the Liberal Democrat MP Edward Davey, warning that "it is clear that Government policy on tobacco taxation is not working" and that "a new Government approach is needed that acknowledged that a fundamental review of tobacco taxes is essential".
The presentation, which took place on 15 December 1999, warned that smuggling was becoming an epidemic and ironically warned about other dangers of this illegal practice including danger to "law and order" and that it encouraged "sales to children" as there were "no control on smugglers selling to children". 
Some seven months later, Gallaher's then CEO Nigel Northridge wrote to the British Prime Minister Tony Blair to complain that smuggling "was spiralling out of control ... the overall strategy on tobacco taxation is not working". 
Facilitating the Illegal Trade
Despite the tobacco industry knowing that cigarette smuggling increased sales to children, documents from the tobacco archive and other evidence has shown the extensive involvement of the industry in facilitating smuggling by shipping huge quantities of cigarettes to "smuggling hubs". The cigarettes were then forwarded via these hubs via the black market, often back to the countries from where they were shipped.
In recent years, many governments and the EU have acted to clamp down on smuggling. However in 2009 estimates showed that 11.6 per cent of all internationally traded cigarettes were still smuggled - around 657 billion cigarettes a year - causing losses to government revenue worldwide of US$40.5 billion. 
In the UK, the percentage of smuggled cigarettes has fallen over the past decade. In September 2011, the British HM Revenue and Customs released the latest figures, showing that on average smuggled cigarettes accounted for about 10 per cent of the market in 2009-2010, down from about 16 per cent in 2005-6. The upper estimate of revenue lost was £2.2 billion, with the lower estimate some £500 million. For Hand Rolling Tobacco, around 46 per cent was smuggled, compared with 60 per cent in 2005-6, resulting in a tax loss of around £620 to £880 million. 
Historical Tobacco Smuggling
Current Tobacco Smuggling
- 2008 Research by Public Integrity.org into Tobacco Smuggling
- ↑ Luk Joossens and Martin Raw, "Cigarette Smuggling in Europe, who really benefits?", Tobacco Control, 1998, 7, 66
- ↑ Ross Hammond & Andy Rowell, Trust Us - We're The Tobacco Industry, Campaign for Tobacco Free Kids, Action on Smoking and Health, undated
- ↑ Jeff Jeffrey and Mark Phillips, Cigarette Taxation Briefing - Edward Davey MP, 15 December 1999
- ↑ Nigel Northridge, Letter to Rt Hon Tony Blair, 24 July 2000
- ↑ Joossens L, Merriman D, Ross H, Raw M, How eliminating the global illicit cigarette trade would increase tax revenue and save lives, Paris: International Union Against Tuberculosis and Lung Disease, 2009
- ↑ HM Revenue and Customs, Measuring Tax Gaps 2011, 21 September 2011