The publication of ITSA’s blueprint comes ahead of the second meeting of the FCTC working group on tracking and tracing systems, which is supposed to be taking place in Brazil in April.
It draws on best practices used by tax administrations around the world in the fight against illicit trade of tobacco products. It adheres strictly to the requirements of Article 8 of the Protocol, which sets out that track and trace systems should be independent of the tobacco industry.
It also resolves weaknesses that academics, civil society and industry experts have detected in the EU Tobacco Products Directive (TPD) model by ensuring that competent authorities, in participating in the track and trace regime, interact only to the extent strictly necessary with the tobacco industry and those representing the interests of the sector.
Within its blueprint, ITSA puts forward a series of recommendations on operational aspects of a track and trace system and assignments of responsibility. The recommendations include establishing a national and/or regional database to register stakeholders (ie. manufacturers, distributors and wholesalers) as well as products, and affixing on every pack of cigarettes a tax stamp issued by the competent authority of the destination market.
The ITSA model aims to reduce fraudulent trade, promote best practice by adhering to the principles set out in the FCTC Protocol, and create a competitive market of track and trace system suppliers and associated technology innovation.
Juan Carlos Yañez, Chairman of ITSA, said: ‘our proposed technical and governance model is a blueprint for parties willing to implement an FCTC Protocol-compliant system. The Protocol is widely recognised as an international standard of best practice for the regulation of tobacco production and distribution, one that will help to reduce illicit tobacco trade providing that countries comply with it.
‘Although certain tasks, such as the reporting of manufacture and shipment information, may be carried out by the tobacco industry, the vast majority of other tasks should be undertaken by the relevant competent authority. This would enable track and trace policy and practice to be largely free from the influence of the tobacco industry – an important consideration set out in the Protocol.
‘We have seen examples around the world where track and trace system tenders have been awarded to companies with close ties to the industry. This contravenes the spirit of the Protocol and could result in the implementation of systems that are not safe and secure. If this happens, it will make it more difficult to cut crime, improve health outcomes and enable revenue authorities to recoup taxes owed to them.’
The proposed ITSA model differs markedly from the EU TPD, which allows for the delegation of key activities to the tobacco industry or a supplier of its choice. In addition, the scope of the TPD is limited to the EU whereas ITSA’s model is scalable on a global level.
The full blueprint is available at https://www.tax-stamps.org/userfiles/files/ITSA%20-%20FCTC%20Protocol%20Blueprint.pdf