Introduction: Increasing the tax on cigarettes is widely considered the most effective method to reduce its consumption. However, Nepal has a low cigarette tax as policymakers in Nepal are concerned about illicit trade of cigarettes if taxes are increased.
Methods: The study employed a retail survey approach used in India suitable for countries with prevalent loose cigarette sales, with improved methodology. In 2021, empty cigarette packs generated in a day's loose cigarette sales were collected directly from cigarette retailers from 23 primary sampling units covering rural/urban, geographic divisions, border/non-border to India and tobacco factory locations. The central points of each primary sampling unit were identified, and retailers were selected for the survey. A cigarette pack was classified as illicit if it had at least one of the following attributes: (a) no authentic excise duty sticker, (b) no graphic health warning, (c) no mention of 'maximum retail price/MRP' and (d) no production date, name, address and trademark.
Findings: We collected 4307 empty cigarette packs from 1204 retailers and 0.33% of them were classified as illicit. The estimates varied across location with the highest prevalence of illicit packs in Kathmandu (1.25%). All the illicit cigarettes were imported and were high-priced brands (>90%), mostly found in urban areas and not bordering India.
Conclusion: Our estimate of the illicit cigarette market share of 0.33% suggests that the industry's statement of 25% is grossly overstated.
Keywords: illegal tobacco products; low/middle income country; taxation; tobacco industry.
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