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  • A Needed Course Correction on Tax Stamping—And a Blueprint for Other States

    A Needed Course Correction on Tax Stamping—And a Blueprint for Other States

    By Dan Mulvaney, PMI U.S.

    For decades, tax stamping has been a cornerstone of most state excise tax systems for cigarettes. The stamping works, in part, because of the per unit tax and packs of cigarettes are uniform in size and distribution. By requiring wholesalers to purchase and affix tax stamps before products reach retail, states have created an efficient, centralized model for tax collection—one that depends on the wholesale channel to function effectively.

    What is often overlooked is the role wholesalers actually play. They are not passive participants—they are, in effect, the state’s tax collection agents. They purchase stamps, invest in specialized equipment, manage inventory controls, and maintain strict compliance and reporting protocols. This is not theoretical; it is an operational reality requiring significant time, labor, and capital.

    That is why stamping allowances have historically existed: to offset the cost of collecting and remitting excise taxes on behalf of the state.

    Yet in recent years, policymakers have moved in the wrong direction. Across the country, stamping allowances have come under pressure—often viewed as a revenue opportunity rather than compensation for a mandated service. In some cases, policymakers have even considered eliminating them altogether, disregarding the real costs imposed on wholesalers.

    Fortunately, the Louisiana Legislature understands the importance of stamping allowances and  what a modern, risk-aligned tax framework should look like. The state has reduced the excise tax rate by 65% for certain products that meet the high bar of being an FDA-authorized Modified Risk Tobacco Product (MRTP). Currently, two unique products – Philip Morris International’s (PMI’s) heated tobacco product, IQOS, and 22nd Century Group’s low nicotine cigarette, VLN – have received this designation, recognizing their distinct profile from traditional cigarettes.

    Just as important, Louisiana paired this approach with practical supply chain incentives. Wholesalers will receive a 10% discount on MRTP tax stamps, while the existing cigarette stamp discount increases from 5% to 6.5%. This preserves operational stability while creating a clear differential that favors modified-risk alternatives.

    Together, these changes reinforce the right market signals—supporting state revenue, maintaining system integrity, and accelerating the transition from traditional cigarettes to modified-risk alternatives.

    By increasing the cigarette stamping allowance, policymakers have taken an important step toward restoring balance—acknowledging that the system only works when the entities responsible for executing it are properly supported.

    This outcome did not happen in a vacuum. It reflects sustained engagement by manufacturers, such as PMI, to ensure that wholesalers and retailers have a voice in the policymaking process. At a time when many stakeholders remain focused solely on tax rates or product restrictions, PMI has consistently focused on the operational realities facing the trade.

    More importantly, PMI has demonstrated leadership as a true partner to the wholesale and retail community. This new law is a clear example of that commitment translating into tangible economic value.

    This is more than a policy update. It is a recognition of the essential role wholesalers play in maintaining efficient, compliant tax systems—and proof that collaboration between policymakers and industry can deliver better outcomes.

    In an environment where allowances have too often been reduced or overlooked, this represents a meaningful course correction. It strengthens the supply chain, supports compliance, and reinforces a simple truth: when policymakers and industry partners work together—and when manufacturers are willing to lead—the entire system benefits.

    Dan Mulvaney is director of industry engagement for Philip Morris International Inc. (PMI) U.S. The businesses of PMI U.S. are on a mission to improve public health in America by providing the roughly 30 million legal-age consumers who still smoke traditional cigarettes with better, smokefree alternatives. PMI U.S. is committed to responsible marketing practices that help prevent access to its products by people under the age of 21. 

  • Polish Officers Seize 223,000 Illegal Vapes

    Polish Officers Seize 223,000 Illegal Vapes

    Officers from the National Tax Administration in Łódź seized 223,688 disposable e-cigarettes without excise stamps during a raid on a property near Zgierz. The devices contained a combined 447 liters of e-liquid, with the market value of the goods estimated at over PLN 473,000 ($128,000).

    Authorities said the scale of the illegal stock exposed the state to potential excise losses exceeding PLN 10.2 million ($2.8 million), given Poland’s current excise rate. The goods were allegedly stored by a 49-year-old man, who has been charged with a serious fiscal crime and potentially faces 10 years in prison.

  • UK Awards Contract for Vaping Duty Stamps Program

    UK Awards Contract for Vaping Duty Stamps Program

    SICPA, a Swiss private technology company that specializes in digital sovereignty and secure public services, announced that it, along with partner Cartor Security Printers, received the contract from His Majesty’s Revenue & Customs to deliver a secure tax stamp and track-and-trace system for vape products in the UK.

    Selected following a multistage procurement process launched in July 2025, the consortium secured a five-year contract, with an option for a one-year extension, after a detailed technical and financial evaluation. The system will be introduced in phases, beginning with a transitional duty stamp in April, followed by an enhanced stamp integrated with a full track-and-trace solution from October.

    Cartor will produce the tax stamps with core physical security features, while SICPA will add advanced material and digital protections, manage coding and the T&T platform, and oversee stakeholder registration, stamp ordering and payments, and compliance monitoring across the vape supply chain. Digital market intelligence tools, enforcement audit devices, and consumer verification applications will further support the detection of fraud and counterfeit activity.

  • Guam Floats Discount to Cig Wholesalers to Offset Stamp Machine

    Guam Floats Discount to Cig Wholesalers to Offset Stamp Machine

    Guam has introduced legislation that would increase the tax discount given to cigarette wholesalers from 4 cents to 15 cents per pack to help offset the high costs of operating tobacco tax stamp machines now required under local law. The proposal comes after the Department of Revenue and Taxation began requiring wholesalers to produce and affix their own stamps to verify tax payments, with each machine costing nearly $200,000 and requiring additional staff, climate-controlled storage, and maintenance. Support for the measure was voiced by Western Sales Trading Company, which said it had to hire up to 10 employees and invest heavily in infrastructure to comply.

    Data said the 3.75% discount is the proper balance between industry costs and government revenue collection. Previous audits by the Office of Public Accountability found that tobacco taxes were historically difficult to verify due to limited tracking of imports, with Public Auditor Benjamin Cruz noting that authorities still lack accurate data on tobacco shipments entering the territory.

  • Indonesia Reviews Cigarette Excise Amid Forgery Allegations

    Indonesia Reviews Cigarette Excise Amid Forgery Allegations

    Indonesia’s government is conducting an in-depth review of the cigarette excise system following allegations of forgery and manipulation, Finance Minister Purbaya Yudhi Sadewa said after a meeting with President Prabowo Subianto. Sadewa noted that he has yet to reach any conclusions, stressing that policy decisions, including whether to proceed with the planned 2026 excise hike, will depend on the results of ongoing studies and field investigations.

    “I will review it again,” Sadewa was quoted in an article from the Indonesian News Agency when asked about the proposal to cancel the planned excise hike. “I have not conducted an in-depth analysis yet — what exactly is going on with cigarette excise? They say there is manipulation, but where exactly is this manipulation happening?”

    The minister highlighted the potential revenue gains from eliminating counterfeit excise stamps, saying such reforms could strengthen state finances without placing additional pressure on consumers. “If I can resolve this and eliminate counterfeit excise, how much revenue would that generate? From there, I can plan the next steps,” he told reporters.

    Lawmakers are also weighing in. At a September 10 parliamentary session, Commission XI member Harris Turino raised concerns about the impact of steep tax increases on major producers like Gudang Garam and their workers, particularly in the machine-made clove cigarette (SKM) sector. He urged the government to prioritize enforcement against illicit trade as a more balanced way to boost revenue.

  • Malaysia’s Illicit Tobacco Trade Down, But Evolving 

    Malaysia’s Illicit Tobacco Trade Down, But Evolving 

    Officials in Malaysia announced that 55% of the cigarettes being purchased are illegal, a decline for the fourth consecutive year since 2020’s peak of 63.8%. JT International Bhd (JTI Malaysia) managing director Juliana Mohd Yahaya said law enforcement efforts in curbing illegal tobacco smuggling and a ban on trans-shipments of tobacco products are helping the cause.

    “We expect the incidence of illicit cigarettes to continue to decline this year,” she said at a news conference discussing the nation’s annual Illicit Cigarettes Study for 2024. “What has also contributed to the reduction in illicit cigarette incidence is the ongoing tobacco tax moratorium by the Ministry of Finance. But we know that at some point, [the moratorium] will end, so if the government were to impose an excise increase on tobacco products, we hope that it would be a moderate and predictable one.”

    Another finding from the study was that an ever-increasing number, 13.8%, of illicit cigarettes bore fake tax stamps, leading companies like JTI Malaysia to advocate for the government’s transition from paper-based tax stamps to digital tax codes, aligning with the government’s digitalization drive.

    Malaysia’s nicotine makeup consists of consumers using 23.8% legal cigarettes, 29.9% illicit cigarettes, 25.3% e-cigarettes/vapes/HTPs, and 20.4% of users who use both traditional and alternative products.

  • Russian Duma Supports Move to Digital Labels

    Russian Duma Supports Move to Digital Labels

    Image: Glitter_Klo

    Russia’s State Duma Budget Committee supports a bill that regulates the procedure for collecting excise taxes and their administration following the transition to digital labeling of tobacco and nicotine-containing products, according to Interfax.

    “The development of the bill is due to the fact that from March 1, 2024, the requirements for labeling tobacco and nicotine-containing products will change. We are abandoning paper stamps and moving to using digital stamps for labeling,” Deputy Minister of Finance Alexey Sazanov said.

    “The term accounting and control special mark is being introduced. This is essentially the bar code that will be applied to the pack. Certain control requirements are being specified—the tax base cannot be less than the corresponding volume of production—tobacco or nicotine-containing products, fixed in state information system,” Sazanov said.

    Regarding the appearance of the digital mark, Sazanov said, “Instead of a physical excise stamp, there will be a barcode, like on medicines, on dairy products. There will be an identification sign.”

  • Holography: Helping Stamp Out Tobacco Counterfeiting

    Holography: Helping Stamp Out Tobacco Counterfeiting

    IHMA says holography plays a key part in tobacco tax stamp programs. Image credit: OpSec

    Paul Dunn, chair of the International Hologram Manufacturers Association (IHMA), looks at how holography plays an effective part in tobacco tax stamp programs.

    Illicit smuggling and counterfeiting cost treasuries billions of dollars a year in lost revenue. And it’s not just a financial cost that affects governments—tobacco manufacturers can see brands tarnished, revenues tumble and market capitalization dented through the counterfeiting of their products. Current figures indicate that the trade in fake tobacco is worth upward of $50 billion annually worldwide, according to a 2020 World Bank report and accounts for approximately 600 billion illicit cigarettes per year.

    It’s against such a global backdrop that holographic security features continue to be widely utilized in tax stamp programs as effective weapons in the war on counterfeiting, assisting governments in securing tobacco excise duty as a critical source of revenue while also providing a highly effective way of controlling and limiting consumption.

    To help tackle the counterfeiting problem, nearly 120  billion tax stamps, in the form of securely affixed labels, are issued annually by hundreds of provincial and national revenue agencies around the world in more than 90 countries. The vast majority (90 percent) are used on tobacco products. This suggests that governments and law enforcement continue to see their value as central features in effective revenue gathering strategies.

    Tax stamps serve two purposes. The first is to provide a record of tax payment, and digitally based tax stamps enable products to be tracked and traced, providing a record of a tobacco product’s journey from the factory floor to the hands of the consumer. The second role is to provide evidence that the stamp—and hence the product it’s affixed to—is genuine. So, the physical integrity of the stamp—protected by security print, taggants and, in many cases, holograms—fulfills this latter requirement. The European Union Tobacco Products Directive (TPD) also includes the option of incorporating a hologram as an overt feature.

    Growth of tax stamps is driven by increased global cigarette consumption on the back of rapid population growth, particularly in developing parts of the world. And, of course, as demand has grown, so too has the trade in illicit products produced by ever more sharp counterfeiters and international criminal organizations. Many counterfeits are intrinsically unsafe and drive incidences in poisoning and deaths due to fake, illicit or substitute products reaching the hands of both innocent and complicit consumers.

    The Right Time

    Now, more than ever, the time is right for everyone with a vested intertest in having a strong and legitimate tobacco sector to come together over illicit trade and lost tax revenues. With the tobacco traceability requirements of the World Health Organization Framework Convention on Tobacco Control (FCTC) Protocol entering into force in 2023, countries that are party to the Protocol have less than two years left to implement appropriate systems. Tax stamps can be the foundation of a highly effective tobacco control program and should include strong holography-based authentication features.

    A tax stamp, which is defined by ISO 22382 as a “visible stamp, label or mark placed on certain types of consumer goods to show that the applicable excise tax has been paid,” can be an integral element of track-and-trace programs and best practice within the sector, effectively monitoring the location and movement of goods throughout the supply chain from manufacture to point-of-sale. A secure track-and-trace program works by assigning a unique individual identity to each item—a pack of cigarettes, for example—during the manufacturing process.

    Once assigned, the identity is stored in a secure database and updated every time there is a significant event, such as a change of ownership or payment of tax due, and supports authentication throughout the supply chain. This produces a comprehensive product history; it means that if the pack (or bottle, in the case of alcohol stamps) is found in a place or state that is irregular, its provenance can be fully traced back and the responsible party held accountable.

    The digital traceability features of tax stamps, combined with their material security features and tamperproof functionality, are the most robust means to ensure tax compliance, audit optimization and product protection.

    Governments and law enforcement agencies around the world are strident in their resolve to find better solutions for protecting tax-raising stamps against the indelible mark of the counterfeiter—a role holographic technology fulfills. The first country to issue a tax stamp featuring a hologram was Romania in 1995. Since then, the number of countries using holography to improve the security of their tax stamps has grown to more than 30. They include Russia, Kazakhstan, Ukraine, India, Indonesia, Sri Lanka, Mozambique, Zambia and several EU states.

    Out of the 22 Indian states that use tax stamps, 19  currently feature a hologram, while in the U.S., the state of Michigan has  developed stamps developed around a holographic security feature with in-built levels of additional security. While cigarette consumption has been in long-term decline in the state, the U.S. project yielded a significant rise in cigarette excise tax collections.

    Application Success

    In Africa, Mozambique is the latest country to adopt new holographic tax stamps and should any one of the continent’s highly populated countries decide to introduce stamps, then the volumes and the value of tax stamps in circulation would escalate significantly. Other parts of the world, large areas of South and Central America and Asia, are seeing more tax stamps emerging where economic prosperity has the best chance of maturing. In these places, in excess of 5 trillion cigarettes are smoked per year (96 percent of all tobacco sales), with volume expected to increase in line with population and economic growth.

    Clearly, these are huge volumes but also an enormous opportunity for resourceful counterfeiters ready to take advantage of regional markets where governments and security agencies either lack the wherewithal to tackle the problem or present resources are overstretched.

    According to Nicola Sudan, secretary general of the International Tax Stamp Association (and also author of the report), “holograms have been one of the cornerstone security technologies since the mid-1990s and, although the emphasis on tax stamps, particularly those used on cigarettes, is now on digital technologies for track-and-trace, authentication remains a core function, and holograms continue to serve that function.”  

    It’s clear that holography is a technology that governments and agencies can rely upon and value as an effective, reliable and dynamic security solution—a critical part of an effective tax stamp program. It’s also apparent that suppliers of components, products and systems to the tobacco sector can rely on this most resourceful and flexible of security devices to protect investments and brand quality.

    Paul Dunn is chair of International Hologram Manufacturers Association, which represents leading producers and converters of holograms for banknote security, anti-counterfeiting, brand protection, packaging, graphics and other commercial applications