Tax stamp body calls for changes to EU's tobacco directive

A trade organisation representing manufacturers of tax stamps has said the EU's Tobacco Products Directive (TPD) needs to be updated to improve its tracking and tracing provisions.

The International Tax Stamp Association (ITSA) has long argued that the TPD's traceability legislation is at odds with the World Health Organization's Framework Convention on Tobacco Control (FCTC) Protocol to eliminate illicit trade in tobacco products, because it says track and trace should not be performed by or delegated to the tobacco industry.

In a statement, the ITSA said that while the TPD has been very effective in some areas, lessons can and should be learnt from it that authorities may adopt as best practice as they move forward with their own plans.

That includes the adoption of the FCTC, says the trade organisation, which points out that the tobacco traceability requirements of the protocol enter into force in 2023, so participating countries have two years left to implement these systems.

Its comments focus mainly on Article 15 of the EU TPD, which prescribes the application of a unique identifier onto each pack of tobacco products so that they can be tracked and traced throughout the supply chain, as well as a review of Article 16, prescribing the application of authentication features on each pack.

The ITSA praised the attempt to establish an interoperable system for traceability information across member states in Article 15, noting that it has "paved the way for the agreement of a standard practice, and a single repository with defined application programming interfaces to communicate that data."

That is in keeping with the objectives of the FCTC. However, weaknesses have been identified, namely the delegation of a large number of responsibilities to the tobacco industry and the unnecessary disaggregation of the system, split into multiple roles for multiple suppliers.

Regarding Article 16, the ITSA notes that that 22 member states decided to comply with this article via their tax stamp, which was to be commended.

However, several member states delegated the responsibilities of Article 16 to the tobacco industry, "which goes against the best practices identified by prior research," said the trade body.

Looking to the future, a revised version of the EU TPD should include significant improvements, according to ITSA.

"A more prescriptive approach would lead to greater clarity around the choice of security features, thereby avoiding countries adopting too many different features, which only creates confusion," it said.

Meanwhile, responsibilities assigned to the tobacco industry "should be limited to ordering, applying and reporting the use of tax stamps, with all other responsibilities reassigned to independent providers selected by government authorities."

The ITSA would also like the TPD's language to be revised to recognise the importance of tax stamps, and require them to have traceability functionality.

"Now, more than ever, the time is right for us all to come together as a united force over illicit trade and lost tax revenues," Juan Carlos Yañez Arenas, chairman of the ITSA.