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Cigarette Smuggling

Bulgarian tobacco firm Bulgartabac to halt exports to Middle East: Reuters

Bulgarian tobacco company Bulgartabac said it would halt sales to the Middle East as of April 1, following media allegations its products made up a large part of the cigarettes illegally smuggled into neighbouring Turkey, Reuters reported.

Bulgartabac denied any wrongdoing, adding its exports had been carried out in full compliance with customs and trade legislation, which had been confirmed by customs and tax audits.

“Given the sensitive situation in the Middle East, Bulgartabac is stopping exports to the region in order to prevent the involvement of the company in artificially created reputation problems that could completely ruin it,”  Bulgartabac said in a statement.

Bulgartabac said the move would result in 400 job losses, about eight percent of the group’s employees.

The allegations against Bulgartabac were reported last month by the Capital daily newspaper as well as the Dnevnik website.

Last year, Bulgartabac’s exports fell 23 percent to 19.3 billion cigarettes on an annual basis.

Official Note Verbale issued on TI Interference & ITIC

http://tobaccowatch.seatca.org/index.php/2016/03/15/official-note-verbale-issued-on-ti-interference-itic/

Has the International Tax and Investment Center (ITIC) been talking to your government? What recommendations has it been proposing? The FCTC Convention Secretariat (FCS) has issued a Note Verbale warning Parties about the ITIC and its activities, and to reject the tobacco industry’s interference in addressing tobacco smuggling problem.

The FCS has warned governments that the ITIC, which has 4 transnational tobacco companies on its Board, has been working to further the interest of the tobacco industry. The ITIC has been organising regional and global meetings where the meetings feature discussions on tobacco taxation and promote tax policies favouring the industry rather than the recommendations of the FCTC especially Article 6 and its Guidelines.

The ITIC will be holding its next annual Asia-Pacific Tax Forum in Jakarta, on 23-25 May 2016. It has routinely invited government officials, especially from customs departments, to attend its meetings. On its website and publications, the ITIC promotes photos of its own executives posing with officials from Asia to illustrate its close association with Asian governments.

Smuggling of tobacco is a problem is faced by many countries in the region. Big Tobacco (PMI, BAT, JTI and IB [Imperial Brands]) has blamed substantial excise tax increases and high tobacco taxes as the problem. Additionally, the industry promotes its own ‘Codentify’ system to solve the smuggling problem.

The FCS’s Note Verbale advices governments not to accept ‘Çodentify’ to address the illicit trade in tobacco products. The Note Verbale reminds Parties to “reject partnerships and non-binding or non-enforceable agreements with the tobacco industry”.

In addition, Article 8.12 of the Protocol on Elimination of Illicit Trade in Tobacco Products, explicitly states that a Party’s obligations shall not be performed by, or delegated to, the tobacco industry. An expert paper, The Tobacco Industry and the Illicit Trade in Tobacco Products provides further information on the tobacco industry’s behaviour in addressing tobacco smuggling.

For information on TI denormalization, check out SEATCA’s Tobacco Industry Watch website.

Police seize 88 tonnes of contraband tobacco in Spain

http://www.thelocal.es/20160311/spain-seize-88-tonnes-of-contraband-tobacco-in-record-haul

Spanish police have seized a record 88 tonnes of contraband tobacco, the equivalent of over eight million packets of cigarettes and arrested six people, the government said Friday.

The tobacco was found in several warehouses in the provinces of Jaen and Almeria in the southern region of Andalucia and it had a street value of €14 million ($15.4 million), the finance ministry said in a statement.

Police detained six people who are suspected of chopping up the tobacco so as to make cigarettes and then selling it over the Internet.

“They even posted several tutorials online where they showed how to roll the cigarettes,” the statement said.

The operation more than doubles the previous record seizure of 41 tonnes of contraband tobacco carried out in November 2015 in Andalucia. Eleven people were detained in Jaen and Madrid as part of that operation.

The authorities suspect the six people who were arrested in the latest sting were trying to “substitute” the contraband tobacco operation that was dismantled last year.

Both contraband operations came to light when legal tobacco sellers in Andalucia complained that their sales had dropped sharply.

‘No’ to deals with tobacco firms

http://www.europarltv.europa.eu/en/player.aspx?pid=759f7750-600e-45a3-a9c0-a5bf00dfca63

MEPs urge the Commission not to extend an anti-smuggling and anti-counterfeiting deal with Philip Morris International (PMI), saying the focus should instead be on using legislative tools.

This motion has passed clearly.

What we need is track and trace and due diligence, first of all in raw cut tobacco. If we do something at the start of the production chain rather than at the end, we will quickly come to a result. Today, the growing problem of cheap whites requires us to continue to work with our Member States to tackle it. Madame Commissioner, let’s not pretend that the tobacco industry is our friend. It’s an opponent instituting legal proceedings against the tobacco directive. The inquirers had to conclude, and that’s very important, that the cooperation with PMI has not demonstrably benefited public health.

Extending the deal with Philip Morris is like trusting the fight against organised crime to Al Capone.

Cigarettes: MEPs oppose renewing EU anti-smuggling deals with tobacco firms

http://www.europarl.europa.eu/news/en/news-room/20160303IPR16929/Cigarettes-MEPs-oppose-renewing-EU-anti-smuggling-deals-with-tobacco-firms

A majority of MEPs urged the European Commission not to renew an EU anti-smuggling and anti-counterfeiting deal with Philip Morris International (PMI), which expires in July 2016, in a resolution voted on Wednesday. Instead, they ask it to focus on using EU and international legislative tools to combat smuggling.

MEPs note that the PMI deal proved ineffective because although it initially reduced smuggling, a surge in smuggled non-branded “cheap white” cigarettes soon filled the gap.

Under the tobacco deals the four largest tobacco firms together agreed to pay the EU and its member states a total of $2.15 billion, over the lifetime of the agreements, to drop legal proceedings against them to recover duties lost to illegal trade in cigarettes. Companies also agreed actively to combat smuggling and counterfeiting of tobacco products.

MEPs note that illicit trade in tobacco products, and in particular the smuggling of contraband and counterfeit cigarettes, still deprives the EU and its member states of revenue (customs, VAT and excise duties) amounting to more than €10 billion a year.

MEPs also worry that annual payments from the tobacco industry to help fund the European Anti-Fraud Office (OLAF) budget, as mentioned in the tobacco agreements, could lead to a conflict of interest.

Rather than renew the PMI deal, MEPs urge the Commission to focus on implementing the 2014 EU Tobacco Directive, which provides for more effective tools, such as an interoperable tracing and tracking system for the cigarettes at EU level, to take effect in 2019. Member states should also ratify a protocol to the WHO Framework Convention on Tobacco Control (FCTC), which does the same internationally..

MEPs stress that WHO Protocol parties are obliged to protect their public health policies from tobacco industry commercial interests and that no obligation assigned to a party should be delegated to this industry.

To bridge the time gap until all provisions of the Tobacco Products Directive become fully enforceable, MEPs ask the Commission to prepare additional new rules dealing with “cheap white” cigarettes, to track and trace PMI tobacco products and to bring legal action against any illegal seizures of the latter.

More than 600m illicit cigarettes seized by HMRC in six months

Between April and September 2015, hundreds of millions of cigarettes and 137 tonnes of hand-rolling tobacco worth £232m in unpaid duty found

http://www.theguardian.com/business/2016/mar/05/600m-illicit-cigarettes-seized-hmrc-six-months-tobacco

More than 600m illicit cigarettes and 137 tonnes of hand-rolling tobacco with a tax value of £232m were seized by the government in the space of six months in 2015.

HM Revenue and Customs (HMRC) said the figures showed the department was reducing the illicit trade but that it remained a “significant problem”.

An HMRC spokesman said by working with other enforcement agencies it had halved the size of the illicit market in cigarettes and that of illicit hand-rolling tobacco by a third.

Between April and September 2015 more than 619.1m cigarettes were seized – with 10.7m of these inland, 182.8m at the border and 425.6m overseas. In the same period 137.8 tonnes of hand-rolling tobacco was also seized.

The combination of both illicit hauls would have lost the government £232m in unpaid duty if they had not been seized.

The spokesman said: “Last year HMRC prosecuted 417 people, prevented £746m revenue losses as a result of investigation of organised crime groups and seized over 1.8bn cigarettes and 313 tonnes of hand-rolling tobacco.

“Tobacco fraud cost the UK £2.1bn in 2014/15. We encourage anyone with information about the illegal sale of tobacco to contact the customs hotline on 0800 59 5000.”

A report published by HMRC in March 2015 said smuggling “undermines legitimate business and is dominated by internationally organised criminal groups often involved in other crimes such as drug smuggling and people trafficking”.

Following the launch of the tackling tobacco smuggling strategy in 2000, HMRC said it had had a significant impact on reducing the trade.

Since then it has decreased the illicit market for cigarettes from 22% to 10% now – with hand-rolling tobacco down from 61% to 35%.

In that same period the revenue lost has fallen from £3.4bn to £2.1bn per year

Hong Kong Customs detects suspected illicit cigarettes smuggling case in Man Kam To Control Point

Hong Kong (HKSAR) – Hong Kong Customs detected a suspected case of illicit cigarettes smuggling in Man Kam To Control Point today (March 4). About 460 000 sticks of suspected illicit cigarettes were seized from an incoming container truck.

Customs officers intercepted an incoming container truck declared to contain assorted cargoes in Man Kam To Control Point today. After thorough inspection, Customs officers found about 460 000 sticks of suspected illicit cigarettes in 29 carton boxes.

The market value of the cigarettes was about $1.3 million with a duty potential of about $0.9 million. The suspected illicit cigarettes were mix-loaded with other goods and concealed in the foremost part of the container. The 59-year-old male driver was arrested and the container truck used for conveying the suspected illicit cigarettes was detained.

Hong Kong Customs will continue to carry out stringent enforcement actions against the smuggling of illicit cigarettes at boundary control points.

Under the Import and Export Ordinance, smuggling is a serious offence.

The maximum penalty is a fine of $2 million and imprisonment for seven years.

Members of the public are urged to report any suspected illicit cigarette activities by calling the Customs’ 24-hour hotline 2545 6182.

 

Thai tobacco maker plans cheap cigarettes to offset new tax

http://www.heraldstandard.com/health_ap/thai-tobacco-maker-plans-cheap-cigarettes-to-offset-new-tax/article_aa059826-bc7a-5520-b5ba-5e303dbd70b2.html

BANGKOK (AP) — Thailand’s state tobacco company said Saturday that it would launch a new, cheaper brand of cigarettes to keep smokers from rolling their own or buying illegally imported untaxed ones due to higher prices from a recently imposed tax hike.

The plan announced by the Thailand Tobacco Monopoly was denounced by anti-smoking activists who just weeks ago applauded the tax hike as a useful deterrent to smoking.

Daonoi Suttiniphapunt, director of Thailand Tobacco Monopoly, said the new brand, which will be slightly smaller in diameter than standard brands, will cost about 40 baht ($1.12) a pack and be launched on April 1. Other brands now range from about 48 to 130 baht ($1.34 to $3.64) a pack, she said.

“We are concerned that smokers will choose other alternatives that will severely harm their bodies, such as low-quality hand-rolling tobacco,” she said in a telephone interview. “They don’t use good quality material, they use no filters and there is a lot more residue. … They might put filters in, but in the process … there is usually more residue such as tar and nicotine than in legal cigarettes.”

According to Daonoi, there are 10.5 to 11 million smokers in Thailand.

“Those who have financial limitations, they will go to cheaper and low-quality products because they have no choice,” she said. “Quitting cigarettes is not easy.”

Dr. Ulysses Dorotheo, a program director for the Southeast Asia Tobacco Control Alliance, scoffed at the reasoning for producing cheaper cigarettes.

“All tobacco products are harmful to health regardless of their form or source, whether roll-your-own or manufactured cigarettes, whether legal or illicit,” he said in an email. “It is a farce to believe that tobacco companies are interested in protecting the health of smokers by promoting the access and use of cheap legal cigarettes.”

“Producing cheap cigarettes that are affordable to the poor and the young is a strategy common to all tobacco manufacturers, whether private or state-owned, to keep tobacco products affordable in order to keep poor people addicted, entice young people to start smoking, and ultimately to maintain industry profits,” he said.

His organization previously praised Thai authorities for increasing the price of domestically produced cigarettes this month by 5 to 10 baht (14 to 28 cents), saying it was a good example of trying to improve public health through tax policy.

TTM’s Daonoi said that after the recent tax hike of about 3 percent, tobacco sales fell and the market size shrank by more than 2 percent.

Tobacco Illicit Trade Protocol

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Anti-Contraband and Anti-Counterfeit Agreement

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