牛津经济研究院-墨西哥的非法香烟消费（英）-2021.9_30页_406kb

Summary of Illicit Cigarette Consumption in Mexico

Core Content

This report by Oxford Economics provides an analysis of illicit cigarette consumption in Mexico from 2019 to the first half of 2021, focusing on the scale, trends, and impact on government revenues.

Main Points

Illicit Consumption Overview

• Illicit incidence in 2021 H1: 18.8% of all cigarettes consumed were of illicit origin.
• Volume increase: Illicit consumption rose by 38% in the first half of 2021 compared to the same period in 2019 (pre-Covid).
• Domestic Illicit dominance: Domestic illicit cigarettes now account for about two-thirds of total illicit consumption, up from 50% in 2019.
• Non-Domestic Illicit stability: Non-Domestic illicit consumption has remained relatively stable, with a slight decline of 0.4% in 2021 H1 compared to 2019 H1.

Legal Consumption Trends

• Legal consumption in 2020: 31.3bn cigarettes were consumed legally, a 12.0% decline from 2019.
• Recovery in 2021 H1: Legal consumption increased by 2.1% compared to 2020, but was still 16% lower than pre-Covid levels (2019 H1).
• Market share shift: Premium brands lost market share due to the pandemic, with mid- and value-priced brands gaining share.

Total Consumption

• Total consumption in 2020: 38.29bn cigarettes, a 9.0% decline from 2019.
• Total consumption in 2021 H1: 17.835bn cigarettes, a 1.8% increase compared to the same period in 2020.
• Illicit consumption in 2020: 7.005bn cigarettes, up 7.1% from 2019.
• Illicit consumption in 2021 H1: 3.353bn cigarettes, up 1.0% from 2020 H1.

Tax Loss

• Tax loss in 2020: MXN 13.5bn, or 19.4% of potential excise tax revenues.
• Breakdown of tax loss:
  • Excise tax loss: 13.5bn MXN (80% from excise tax evasion, 20% from foregone VAT).
  • In 2021 H1, tax loss was estimated at MXN 6.7bn, about half of the 2020 total.

Regional and Brand Trends

• High incidence regions: Central and western central regions of Mexico showed higher illicit consumption, with cities like Tepic, León, and Celaya leading.
• Popular illicit brands: 'Economicos' and 'Link' accounted for nearly 80% of domestic illicit consumption in 2020.
• Non-Domestic illicit brands: 'Brass' and 'Win' made up around 50% of non-domestic illicit inflows, with other notable brands including 'Marshall' and 'Marble'.
• Price comparison: Non-Domestic illicit cigarettes typically retail at MXN 20–24 per pack, while Domestic illicit cigarettes are priced around MXN 28 per pack. Legal cigarettes (most sold brand) retail at MXN 66 per pack, with taxes accounting for nearly 70% of the price.

Key Information

• Illicit consumption growth: The rise in illicit consumption was driven by the increased availability of domestic illicit cigarettes, which lacked the SAT security code.
• Covid-19 impact: The pandemic led to a significant drop in legal consumption, but illicit consumption continued to grow, partially offsetting the decline.
• Taxation system: Mexico uses a mixed excise tax system, including a 160% ad-valorem tax and a specific tax of MXN 0.5108 per cigarette (indexed to inflation).
• VAT: Cigarettes are also subject to a 16% VAT.
• Methodology: Estimates were derived from Empty Pack Surveys, Nielsen retail audit data, and CONAINTA sales data. Tax loss was calculated based on the volume of illicit consumption multiplied by the applicable tax rates.

Impact on Government Revenues

• Excise tax revenue: Legal domestic excise tax revenue was MXN 43.8bn in 2020, up 3.2% from 2019 despite a decline in legal consumption.
• Tax loss implications: The loss of excise tax and VAT revenue due to illicit consumption has been significant, especially during the pandemic when overall government revenues were under pressure.

Conclusion

Illicit cigarette consumption in Mexico has been on the rise, with domestic illicit cigarettes playing a major role. The trend is influenced by economic factors, including the pandemic, which led to a shift in consumer behavior toward cheaper, non-duty-paid products. This has had a substantial impact on government tax revenues, highlighting the need for stronger enforcement and monitoring mechanisms to curb illicit trade.