International Tax and Investment Center
The International Tax and Investment Center (ITIC) was founded in 1993. It claims to be an independent, nonprofit research and education foundation. ITIC has offices in Azerbaijan, Kazakhstan, the Philippines, Russia, Ukraine, the United Kingdom and the United States and works in many more countries around the world. Two years after its inception, ITIC reported that its principle asset was in providing its sponsors “a seat at the policy-making table.”
ITIC is funded by major multinational corporations including all of the leading transnational tobacco companies (TTCs): Philip Morris (PMI), Japan Tobacco International (JTI), British American Tobacco (BAT), and Imperial Tobacco. Its Board of Directors includes representatives from each of these companies. In the past, ITIC has lobbied against tax policies on tobacco and on tackling the illicit trade in tobacco (see International Tax and Investment Center - A History of Tobacco Industry Facilitation). More recently, the Center's research has been cited in the debate on plain packaging (see below).
- 1 Meetings with Governments - At Odds with 5.3?
- 2 Against the TPD
- 3 Work on Smuggling
- 4 Lobbying Against Plain Packaging
- 5 Lobbying Against Tobacco Taxation in Private Meeting Ahead of COP 6
- 6 Recruits High-Level ex-Tax Officials
- 7 Establishing Academic Groups
- 8 Hosts High Level Meetings
- 9 Backlash Against ITIC
- 10 TobaccoTactics Resources
- 11 TCRG Research
- 12 Notes
Meetings with Governments - At Odds with 5.3?
Evidence shows that ITIC has meet with and advised high-level government representatives worldwide, including:
- Advising the Ukrainian Tax Committee in 2008 to model tobacco tax rates after Russia, a country with a high smuggling rate.
- Advising the Ukrainian government on operation and customs control of duty free retail outlets and published reports on tobacco taxation, including one report in Eastern Europe urging that accession countries be given a longer time to implement tax increases to make sure that tobacco remains "affordable" and another report criticising the World Bank's work on tobacco.
- Sponsoring conferences on tobacco tax policy including a 2008 seminar on Eastern European tobacco taxation in Hungary, where 40 government officials from new EU member states attended.
By facilitating meetings and conferences which give the industry undue access to policymakers and government officials and thereby the opportunity to influence policy, ITIC directly contravenes Article 5.3 of the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC). Article 5.3 strongly advises that public policy should be free from tobacco industry influence.
Against the TPD
ITIC facilitated meetings on behalf of the tobacco industry have been used to lobby against further regulation of tobacco and smoking, such as the EU Tobacco Products Directive (TPD):
- In 2009, ITIC received additional funding from BAT, JTI and Philip Morris for a conference on tobacco smuggling (“Anti-Illicit trade of tobacco products”) between 4-6 November in Brussels. ITIC representatives spoke, along with speakers from the EU Anti-Fraud Office (OLAF), and other law enforcement agencies. It was chaired by Elizabeth Allen, who retired from British Customs in March 2009.
- In May 2011, the Kangaroo Group hosted a Forum on Intellectual Property, Counterfeiting and Piracy, which was addressed by ITIC president Daniel Witt. The Kangaroo Group, based in Brussels, is a business lobby association comprising of representatives of the European Parliament, Commission and Council, Academia, Media and the Business Community.. Its members include: JTI, Philip Morris, BAT and Imperial Tobacco as well as the Confederation of European Community Cigarette Manufacturers (CECCM). During his address, Witt reiterated the industry position that the introduction of plain packaging for tobacco products “should be carefully looked at on the grounds that they could very well worsen the problem, making life easier for counterfeiters to flood EU markets with cheap fakes.”
- In December 2011 Witt penned an article with Edit Herczog from the European Parliament’s Industry, Research and Energy committee, which warned that “If new laws are not carefully considered in terms of how they may impact the black market, rather than tackling smoking, they may end up transferring the wellbeing of EU citizens to the hands of criminals.”
- In July 2012, ITIC also participated in the World Customs Organisation (WCO) Global Excise Summit in Brussels.
Work on Smuggling
ITIC has partnered with Oxford Economics, which describes itself as one of the world’s leading independent global advisory firms, to product reports on the illicit tobacco trade in Asia.
Asia 11 – Illicit Tobacco Indicator 2012
In September 2013, Oxford Economics published the findings of its Asia-11 study that it conducted with ITIC on behalf of Philip Morris Asia (an affiliate of PMI), in order to quantify the illicit trade in 11 Asia Pacific markets.
Asia-11 refers to a group of markets which includes Australia, Brunei, Hong Kong, Indonesia, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand, and Vietnam.
The report claimed that:
- 66.5 billion (9%) cigarettes consumed in the countries surveyed were illicit – either illegally imported (5.6%) or illegally manufactured locally (3.4%);
- Brunei, Hong Kong, Malaysia and Singapore, countries with high tobacco taxes, had the highest volumes of illicit cigarettes – over 25% in 2012;
- Governments were losing billions of dollars lost tax revenue due to illicit trade.
The Asia-11 report has been critiqued in a report by the Southeast Asia Tobacco Control Alliance (SEATCA). SEATCA argued that the Asia-11 report was biased in favour of the tobacco industry because:
- the big four transnational tobacco companies are members of ITIC (one of the authors);
- the report was funded by Philip Morris International;
- the report’s conclusions were in line with the industry’s rhetoric that illicit trade is an ever increasing problem and that public health interventions like tax increases should be modest.
Furthermore, a peer-reviewed study published in the journal Tobacco Control attempted to validate Oxford Economic’s and ITIC’s estimate that 35.9% of tobacco consumed in Hong Kong in 2012 was illicit. Using data from government reports and publically available routine data, the authors of the Tobacco Control article estimated that illicit cigarette consumption was between 8.2% and 15.4% of the total cigarette consumption in Hong Kong in 2012. The OE/ITIC report was written by Elizabeth Allen. Since her retirement from Her Majesty’s Revenue and Customs (HMRC) in March 2009, Allen carried out three successive policy development reviews for the UK Government’s Office as well as acted as a consultant and programme advisor for ITIC. The foreword to the report was written by Kunio Mikuriya, the Secretary General of the WCO.
Asia 14 – Illicit Tobacco Indicator 2013
In September 2014, on behalf of PMI, Oxford Economics and ITIC published Asia-14, Illicit Tobacco Indicator for 2013. Asia-14 refers to a group of markets, which includes all of the aforementioned countries in the Asia-11 report plus, three additional countries, Cambodia, Laos and Myanmar.
Oxford Economics and ITIC claimed that in 2013:
- 10.9% of cigarettes consumed in Asia-14 were illicit;
- Illicit consumption rose in 7 out of the 11 markets examined in the previous Asia-11 report;
- Government tax losses totalled 3.9 billion US dollars.
Again, SEATCA offered a critique of the PMI funded report undertaken by Dr Hana Ross, an expert on the economics of tobacco control. SEATCA claimed that the figures and statistics presented in the Asia-14 report waere “incorrect” or “unverified/unverifiable”, and were are “not comparable across countries and are inconsistent with results from other studies” in the region. Furthermore, SEATCA criticised the report’s lack of transparency in relation to its Empty Pack Survey (EPS) methodology used to estimate levels of illicit, the following excerpt is taken from SEATCA’s critique:
- "The Empty Packs Survey (EPS), which is a crucial component of the “IT Flows model” upon which most of the report is based, does not fully disclose its sampling frame, the timing of data collection, the criteria for distinguishing legal and illegal packs, and other crucial survey parameters, even though the validity of data generated by the survey are very sensitive to such issues."
- "No information is provided about the packs that could not be classified as illegal or legal with certainty, and whether or not the collected packs are available for reinspection."
EPS methodology involves the collection of discarded packets in order to identify non-domestic packs which have not paid the country specific duty. This methodology has been criticised by researchers at the University of Bath for its inability to distinguish between legal cross-border duty-free product and that which has been illegally smuggled into the country thereby leading to overestimations of illicit.
Asia 16 – Illicit Tobacco Indicator 2014
In October 2015, on behalf of PMI, Oxford Economics and ITIC published Asia-16, Illicit Tobacco Indicator for 2014, however, access to the full report requires a membership log in account. Nevertheless, a report for Hong Kong alone is available online.
Asia-16 refers to a group of markets, which includes all of the aforementioned countries in the Asia-14 report plus, two extra countries Macao and South Korea.
Press coverage of the Asia-16 report in the Philippines and Macau in late 2015 highlighted the potential bias of the reports and referred to previous critiques of the Asia-11 and Asia-14 reports offered by SEATCA.
Lobbying Against Plain Packaging
The aforementioned report was also used to lobby policy makers against plain packaging proposals in Brussels, Australia and the UK.
- At a meeting on intellectual property, counterfeiting and piracy in Brussels in 2011, Daniel Witt, President of ITIC, called on policy makers to assess any potential impact on aggravating illicit trade that measures such as the introduction of plain packaging for cigarettes may have. (for more detail, see below).
- It was cited in the submission to the Australian consultation on plain packaging by Amcor, the world’s largest packaging company..
- Philip Morris used the report in its submission to the UK 2012 consultation on plain packaging to arouse concern amongst policy makers by linking smuggling, organised crime and terrorism with detrimental impacts on local communities and children:
- “The criminal gangs that smuggle and sell the vast majority of the nearly nine billion illicit cigarettes (and HRT [Hand Rolled Tobacco] equivalents) consumed in the UK each year operate in the hearts of local communities. Illicit cigarettes are not the only things these criminal groups bring to local neighbourhoods: they also bring smuggled alcohol, guns, drugs, and violence.(131) The man on the corner selling cigarettes to kids from the boot of his car is not acting alone – his sales fund serious organised crime and terrorism.(132)” 
While footnote (132) refers to the ITIC report, footnote (131) is a reference to a quote from Peter Sheridan in an article in the Daily Mail. Sheridan is a former policeman often cited for his experience and expert knowledge of the fight against smuggling. His close links to BAT - as detailed on his TobaccoTactics page - were not disclosed by PMI.
Lobbying Against Tobacco Taxation in Private Meeting Ahead of COP 6
On 12 October 2014, the morning before the Sixth Conference of the Parties (COP) of the FCTC, ITIC hosted an exclusive event in Moscow for representatives from Ministries of Finance.
In an attempt to stall anticipated tobacco taxes, set to be agreed upon at the COP, the ITIC briefing was open to “invitation-only” officials and aimed to “ensure there is a balanced approach to important excise taxation issues”.
In a private invitation sent to select delegates from around the world, ITIC urged Ministers of Finance to insist that “the government delegations include representatives from their Ministries of Finance and/or Tax Administrations who can lead the debate from the fiscal perspective” (see Image 1). The meeting, held at a luxury resort in Moscow in collaboration with the Eurasian Economic Commission, included a “Review of Best and Worst Practices of Tobacco Excises” as well as a “Panel Discussion on the Next Steps”.
This meeting is another violation of Article 5.3 of the FCTC.
Recruits High-Level ex-Tax Officials
In May 2015 the former Head of Corporate Tax at HMRC, Dave Hartnett, was criticised for taking a position as a Director at ITIC alongside representatives from the tobacco industry. Hartnett had previously been involved in disputes over “generous” tax deals with global corporations and had been condemned for his advisory work with HSBC, an international corporate bank, since leaving HMRC.  Health campaigners expressed concerns that Hartnett should have declared his role, as he chaired meetings for ITIC and presented at its conferences less than two years after leaving his senior civil servant position. In a statement, Hartnett claimed that he was, along with other “leading figures in taxation”, a nominal director of ITIC,
- “I am not paid for that role [with ITIC]… I am not an executive director and do not in any way direct the strategy or business of ITIC. I know ITIC as a not-for-profit research and education organisation, which supports the development of tax systems in less developed countries.”
Subsequently, the World Bank announced it was pulling out of a tax conference funded by several of its transnational tobacco company supporters given mounting concerns about ITIC and its role in undermining health policy (See below).
Establishing Academic Groups
Academy of Public Finance – Vienna University of Economics and Business
Having established “successful” tax training programmes in Azerbaijan and Kazakhstan, in 2012 ITIC expanded its training courses into 12 countries across the Eurasia region.  These were conducted in collaboration with the Institute for Austrian and International Tax Law at Vienna University of Economics and Business, the International Finance Corp and the accountancy firm, Ernst & Young. Together, the institutions launched the Academy of Public Finance as a public/private initiative, which offers policymakers and administrators training in three core areas of taxation over two years.
In its September 2013 monthly Bulletin, ITIC confirmed that the Academy of Public Finance had received start-up funds from Japan Tobacco International (JTI), stating:
- “We are most grateful to JT International who provided expert advice on practical tax matters and made a two-year sponsorship commitment to finance the start-up and secretariat infrastructure that will be based at Vienna University of Economics and Business.”
Leading the development of the Academy of Public Finance was Dr. Jeffrey Owens, Professor and current Director of the Global Tax Policy Center (GTPC) at the Institute for Austrian and International Tax Law. Owens, who previously worked on tax matters at the Organisation for Economic Co-operation and Development (OECD) and as a government advisor on tax and business issues has served as a “distinguished fellow” at ITIC since May 2012.
The Africa Tax Institute
Although originally focused geographically in Eurasia, the Academy of Public Finance has since expanded its programmes into Africa. According to the website, ITIC has been working with 20 African countries since 2000 and claims that “in a large part, the ITIC policy recommendations on excise reform have been enacted and are part of the current law in Kenya and Ghana.”A key partner in ITIC’s operations in Africa is the Africa Tax Institute.
The Africa Tax Institute (ATI) is a research group based in the Department of Economics, University of Pretoria, South Africa, which claims to be “devoted to training, research, and technical assistance in the areas of tax policy and tax administration on the African continent.” In June 2015, the ATI announced collaboration with the GTPC at the Vienna University of Economics and Business, thereby expanding the Academy’s influence and reach on the continent. ITIC maintains a strong presence in the ATI through the Advisory Board, where senior ITIC Economics Advisor Sijibren Cnossen holds a position.
Sijibren Cnossen, a Professor of Economics at Maastricht University, the Netherlands and a Professor of Economics at the University of Pretoria has also served as an advisor to the OECD and advised governments on tax system and policy issues. ATI’s director, Riël Franzsen of the Faculty of Economic and Management Sciences at the University of Pretoria, has also assisted ITIC in a role as “Senior Advisor”.
Africa Tax Dialogue in Mozambique
In June 2015, ITIC announced that all three - Owens, Cnossen and Franzsen - would sit on the organising committee, representing ITIC for the 7th Africa Tax Dialogue in Maputo, Mozambique 17-19 November 2015.
According to the ITIC website, the dialogue would:
- “focus on tax coordination within regional economic communities (RECs) in Africa. Each of the forums includes focus on tax coordination and brings together the Secretariats from EAC, SADC, UEMOA, and ECOWAS to discuss their own tax coordination and also learn of the best practices from others.”
Hosts High Level Meetings
In hosting high level meetings with officials, members of national and regional governance organisations, and with international institutions, ITIC has provided tobacco industry allies access to individuals and organisations it could otherwise be difficult to access directly – for example, access has been given to representatives of the World Bank (WB) and International Monetary Fund (IMF), members of the EU Parliament, high level members of the European Commission,and representatives from global governments.
Africa Tax Dialogue Meetings
Africa Tax Dialogue meetings provide a forum for ITIC to effectively represent tobacco industry interests on matters of tax and illicit trade in Africa and allows its representatives direct access to the policy makers and Ministers of Government who attend the meetings.At the African Tax Dialogue meeting in Tanzania in July 2014, ITIC’s president Daniel Witt and Senior Advisors Jeffrey Owens and Sijibren Cnossen were brought together alongside the Tanzanian Minister of Finance Saada Mkuya Salum, where they took part in a special workshop on ”Combating Illicit Trade of Excisable Goods”.
In the workshop, KPMG’s ‘Project Star’ was referenced in discussions of illicit trade in the EU, despite the fact the study has been questioned by academics (including those at the University of Bath) due to problematic methodologies, which allowed the project to overestimate illicit cigarette levels in some EU countries.
Backlash Against ITIC
In May 2015, the tobacco control community successfully pressurised the World Bank to withdraw its financial support for the 12th Annual Asia Pacific Tax Forum in New Delhi, which was being organized by ITIC and therefore indirectly sponsored by tobacco companies.
In the wake of the World Bank withdrawal from the Eurasia Tax Forum, Dr Doug Bettcher, Head of Non-Communicable Disease at the World Health Organisation, spoke out about ITIC and the tobacco industry’s third party tactics:
- “ITIC has published extensively in favour of the tobacco industry’s false positions on excise taxation, investment and illicit trade in tobacco products…ITIC have used their international conferences.. to lobby government officials against tobacco taxation.” 
Bettcher also commented that “WHO urges all countries to follow a non-engagement policy with ITIC.” 
- International Tax and Investment Center - A History of Tobacco Industry Facilitation
- Oxford Economics
- Third Party Techniques
- Lobby Groups
- A list of all pages on Africa
- Framework Convention on Tobacco Control
- Peter Sheridan
- Plain Packaging
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