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Cigarette Smuggling

Reduction in tobacco taxes to be a disaster: PIMA

Doctors resent government’s plan to make smoking ‘easier’

https://www.thenews.com.pk/print/206442-Reduction-in-tobacco-taxes-to-be-a-disaster-PIMA

Reacting to a statement made by the Special Assistant to the PM on Revenue, who has expressed that high taxes on cigarettes encourage smuggling which, in turn, costs billions to the exchequer, the president of Pakistan Islamic Medical Association (PIMS) Wednesday suggested that if such a cause and effect relationship is logical, then the government should bring heroin, hashish and other menaces in the open market as a commercial commodity as well, and earn huge income through taxes.

“The government should be ashamed for increasing the prices of basic commodities like bread, fruits, milk, petrol, electricity, etc. and reducing the prices of dangerous items like tobacco,” the PIMA chief stated. He pointed out that Pakistan has one of the largest populations of tobacco users in the world, with over 22 million adults smoking cigarettes, ‘huqqa’ or ‘biri’ and millions more using smokeless tobacco products, including ‘gutka,’ ‘naswar,’ and ‘paan.’ Over 100,000 deaths are attributed to tobacco use each year from lung and oral cancers, strokes, heart and respiratory diseases.

Research has shown that increase in tobacco prices leads to a decrease in the number of smokers in a given community, one of the most effective of many strategies to curb tobacco use. “Here, our government is going to do exactly the opposite: make it easier to buy cigarette. While it may not matter for the richer strata of the society, even a small price increase matters a lot for the poor and lower middle class. It is this group unfortunately that is farthest away from any sort of health education, health care and economic benefits when it comes to illness that inevitably stems from tobacco use,” the PIMA president pointed out.

A research study on tobacco taxation in Pakistan, conducted jointly by FBR, World Bank, University of Toronto, Johns Hopkins University, University of Illinois at Chicago, and Beaconhouse National University, concluded that a uniform specific excise tax of Rs31.2 per pack of 20 cigarettes, could reduce overall cigarette consumption by 7.5 per cent, increase tax revenues by Rs27.2 billion, leading to over half a million users quitting and reducing premature deaths among current adult smokers by over 180,000, while also preventing 725,000 youth from taking up smoking.

Only a week ago, the Minister of State for Health Saira Afzal had recommended an increase in the Federal Excise Duty on lower slab of all brands of cigarettes from the current Rs32.98 to Rs44 per pack of 20 cigarettes.

Organised crime syndicates smuggling ‘low risk’ tobacco leaf and cigarettes into Australia

ORGANISED crime syndicates trafficking drugs like ice and cocaine are now smuggling tobacco leaf and cigarettes and funnelling the cash back to terrorist groups.

http://www.geelongadvertiser.com.au/news/national/organised-crime-syndicates-smuggling-low-risk-tobacco-leaf-and-cigarettes-into-australia/news-story/81507f303ce6c7005b0f764afc10fe9b?nk=4a17044c8404afede5aa34fab4c90734-1490219416

With government taxes on tobacco set to rise again in May’s federal Budget, black market tobacco leaf and cigarettes are now as profitable as narcotics.

And such is the “low risk high return” market, Federal law enforcement now have credible evidence monies from tobacco trafficking are supporting terrorist groups in the Middle East.

Lead national crime fighting agency Australian Border Force intelligence has flagged a noticeable shift in the pattern of trafficking of tobacco which is rising exponentially, in ordinary postal mail alone by 10 to 15 per cent every year.

According to figures obtained by News Corp Australia, in January last year 3.6 million sticks of cigarettes and 435kg of loose leaf tobacco was intercepted at the nation’s main foreign parcel receiving facility in Sydney through which 75 per cent of all mail nationally passes through.

But this January, the latest monthly figure available, 5 million sticks and more than 1 tonne of loose leaf was intercepted.

Last year’s record average was 150 tonnes of loose leaf and 40 million sticks seized but this year that’s expected to be significantly eclipsed.

The difference has been the emergence of serious organised crime groups as opposed to opportunists taking over the trade almost in entirety.

“It’s all about the money,” one frontline ABF officer involved in the fight said.

“Those who were sending drugs are now involved, because the profit is there. We will recognise the mail coming through as being from the same criminal syndicate … over the last 12 months with tobacco we are actually seeing the exporters using the methodologies we would normally see with drugs.”

Such is the profit margin, ABF recently seized a teddy bear with just four packets of cigarettes sewn into it, a considerable effort for just $60 profit but in multiple individual teddy parcels it could be considerable.

Most of the illicit cigarettes, some of which ends up on the shelves of legitimate corner shops, is from South Korea, Japan, China and Hong Kong while loose leaf is mostly from Indonesia and the Middle East.

Some of it is manufactured legally but with the intention to import it specifically to Australia (evidenced in their plain packaging) to avoid duties or to fuel the black market with foreign markings and brands.

While the trafficking alone is a concern so to are its national security implications.

It has been learnt Australia’s multiagency counter terrorism agents, including the ABF, Australian Federal Police and ASIO, have been warned by overseas counterparts notably both US and French authorities and Interpol that the tobacco smuggling industry was being taken over by terrorist networks.

Specifically suspects linked to Lashkar-e-Taiba and the Taliban in Pakistan, Hezbollah in Lebanon and elements linked with al-Qaeda in the Islamic Maghred (AQIM) in North Africa, Islamic State (ISIS) and even Colombian militant group FARC who traditionally have been involved almost exclusively just in cocaine production.

Australian authorities have intelligence of targets here believed to be in the tobacco smuggling trade and sympathetic and or indirectly linked to the Islamic extremist cause of both Hezbollah and ISIS.

Authorities have conceded the thresholds that have to be established for a prosecution with proof of knowledge and proof of origin are substantial and hard to make, not helped by suspected corrupt import brokers and freight handlers.

Earlier this month, the Australian Criminal Intelligence Commission (ACIC) told a parliamentary joint committee inquiry into illicit tobacco it was a “low risk high reward” trafficking industry and as such high-end criminals were using profits to fund into other criminal enterprises.

This included those with jihadist terror links, although sensitivities around element prompted a request for the evidence to be heard behind closed doors.

There was evidence just one successful import out of 20 attempts from the Middle East was all that was needed to turn a profit.

In 2015, the ABF recognised the rise in tobacco smuggling and the potential loss to government in tax revenue and created a dedicated strike team.

The level of illegal trafficking attempts is expected to rise significantly with a 12.5 per cent increase in excise and customs duties to come in this September under the Federal Government’s May budget, to make the average cost of a packet of cigarettes the most expensive in the world at up to $40 a packet.

Stamps mandated for tobacco products

The Tax Authoritiy (AT) has introduced a “control” stamp on tobacco products and plans the same for alcohol to reduce revenue loss from illicit trade, the AIM news agency reported.

http://www.tobaccojournal.com/Stamps_mandated_for_tobacco_products.54149.0.html

All imported and domestically manufactured products must bear the stamp to be sold legally, said AIM, the Agência de Informação de Moçambique. Amelia Nakhare, AT chairperson, said the new stamp would have a significant impact on government revenue and the country’s fiscal organisation, AIM said. She reportedly announced the new stamp during a visit to the British American Tobacco factory in Maputo, where cigarettes bearing the new seal were being manufactured.

Recent Gains on Global Tobacco Taxation

http://blogs.worldbank.org/health/recent-gains-global-tobacco-taxation

The landmark Surgeon General’s Report on Smoking and Health, issued by U.S. Surgeon General Dr. Luther Terry in 1964, represented the first time that a government report linked smoking and ill health, including lung cancer and heart disease. The scientific evidence accumulated over the past five decades has helped us understand how tobacco use imposes a heavy health and economic burden across countries.

Action to curb tobacco use makes solid economic sense, given the high costs of tobacco-related illnesses and premature death and disability among adults in their most productive years. Smoking harms health, incomes, earning potential, and labor productivity. Smoking also undermines human capital development —a critical factor for inclusive economic and social development.

Raising tobacco taxation commensurate with affordability levels is proven to be the most effective measure to curve consumption. Tax increases are most effective in countries where the social acceptability of smoking is reduced by curtailing smoking in public places and educating the population about its negative health impact.

Contrary to the assumption that tobacco taxes are regressive, the results of recent studies done in Chile and the United States show that the benefits of this policy measured in terms of lower medical expenses and an increase in working years outweighs any relative increase in tobacco prices, largely benefitting the poor more than the rich.

Over the past decade, the World Bank Group (WBG), in partnership with the Bill & Melinda Gates Foundation and the Bloomberg Foundation, and in coordination other organizations, such as WHO, has expanded its tobacco taxation work globally to assist countries implement their public health and domestic resource mobilization efforts. Simultaneously, technical assistance is being provided to strengthen countries’ legal and regulatory capacity to control illicit tobacco trade. Support is also being provided to facilitate knowledge-sharing, building upon existing platforms such as the Joint Learning Network (JLN).

The experience of Philippines over 2012-2016 is one of the most compelling examples of ambitious national tobacco tax reform. It involved a fundamental restructuring of the country’s tobacco excise tax structure, including reduction in the number of tax tiers; indexation of tax rates to inflation; and substantial tax increases which expanded the fiscal space to fund the increase in the number of families enrolled in the health insurance scheme from 5.2 million primary members in 2012 to 15.3 million in 2015.

More recently, national governments in several countries have adopted significant tobacco tax reforms to improve public health and mobilize domestic resources, covering a total population of 200 million people. In the Ukraine, the 2017 budget includes a 40% excise tax increase on tobacco products, above the 2016 level, while maintaining a 12% ad valorem tax. It is estimated that that this measure will increase on average the excise tax burden as a share of the retail price of a pack of cigarettes from 41% in 2016 to 46% in 2017, while consumption is expected to decrease by 10%. To get a sense of the magnitude of health gains likely to result from the adoption of these tax increases, modeling work estimated that, by 2035, Ukraine’s recent tobacco tax increases will prevent 126,730 new cases of smoking-related disease; 29,172 premature deaths; and 267,098 potential years of life lost, relative to no change in tax. These reductions in disease and death are estimated to result in significant healthcare costs avoided.

As part of broad fiscal reforms approved by Colombia’s Congress, new taxes on tobacco products will nearly triple prices over 2017-2018, with annual adjustments for inflation and a mandated specific increase in subsequent years. Likewise, in Moldova, the average excise tax burden on a pack of cigarettes will increase from 39% in 2016 to 45% in 2017.

Following the introduction of the new tax regime in 2017, Armenia’s tobacco excise tax burden will double, increasing to 62% of the average retail price by 2020. In the case of Armenia and Colombia, tobacco taxation increases are part of larger tax system reforms that were included under fiscal consolidation programs.

In moving forward this agenda, we have to be clear that to be effective and sustainable, the design of tobacco tax reforms has to be grounded on a good understanding of how public policy is created and implemented in a country, including the social forces which could support or hinder the passage of strong anti-tobacco measures. We also have to be mindful that the adoption of tobacco tax reforms could be greatly facilitated if they are included as part of broad fiscal consolidation programs as shown by the recent experience in Armenia and Colombia, or as part of the formulation of annual government budgets as shown by the experience in Moldova and Ukraine.

KLIA customs cripple cigarette, chewing tobacco smuggling bid

The Royal Malaysian Customs at Kuala Lumpur International Airport (Klia) crippled an attempt to smuggle in 2.56 million sticks of cigarette and 7,560 kg of chewing tobacco on Sunday.

The consignment was valued at RM400,000 with unpaid taxes amounting to RM2.2 million.

Klia Customs director Datuk Hamzah Sundang said three lorries and three local men aged between 26 and 34 years were intercepted at the cargo inspection section.

“The three lorries were found to be loaded with cigarettes and chewing tobacco without any declaration document to allow them to pass through the Klia customs cargo gate,” he told a media conference here today.

He said the three men had been remanded for seven days to assist in the investigation under Section 135(1)(a) of the Customs Act 1967.

Hamzah attributed the success of the case to the Coordinated Border Management (CBM) operation launched on Jan 15 to curb leakages and smuggling activities.

He said throughout the CBM operation conducted at the Klia Free Trade Zone, 30 cases of wrongdoing were recorded, of which 29 were issued compounds and one, prosecuted in court under the Customs Act.

“For the period between Jan 15 and March 6, 2017, RM295.66 million were collected throughout Ops CBM, an increase of 22.66 per cent compared to the same period last year, ” he said, adding that the operation was ongoing. — Bernama

Industry involvement in EU tobacco tracking system divides stakeholders

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HK customs seizes 900,000 suspected illicit cigarettes

HONG Kong Customs on Friday said they have seized about 900,000 suspected illicit cigarettes with an estimated market value of 2.4 million Hong Kong dollars (about US$0.3 million ) and a duty potential of about 1.7 million Hong Kong dollars.

http://www.shanghaidaily.com/nation/HK-customs-seizes-900000-suspected-illicit-cigarettes/shdaily.shtml

During an anti-illicit cigarette operation on Thursday, customs officers intercepted a truck in Kwai Chung. After inspection, customs officers found about 900,000 sticks of suspected illicit cigarettes in 108 carton boxes on board the truck. A 40-year-old man was arrested and the truck was detained. Investigation is ongoing.

Hong Kong customs said, smuggling is a serious offense. Under Hong Kong’s Import and Export Ordinance, any person found guilty of importing or exporting unmanifested cargo is liable to a maximum fine of two million Hong Kong dollars and imprisonment for seven years.

They added that under the Dutiable Commodities Ordinance, anyone involved in dealing with, possession of, selling or buying illicit cigarettes commits an offense. The maximum penalty upon conviction is a fine of one million Hong Kong dollars and imprisonment for two years.

Slovenia adopts plain packaging

Congratulations to SFP Coalition Partners No excuse Slovenia and Slovenian Coalition for Public Health, Environment and Tobacco Control for their tireless advocacy to support this legislation in the last year.

http://www.smokefreepartnership.eu/partner-news/item/slovenia-adopts-plain-packaging

On 15 February the Slovenian Parliament adopted the draft law proposed by the government without a single vote against. Plain packaging is expected to enter into force in 2020.

Briefly, the new Slovenian Tobacco law includes:

– Plain packaging (65% coverage with health warnings and quitting information)
– Introduction of license for selling tobacco products,
– Total display and Tobacco advertising, promotion and sponsorship (TAPS) ban
– Prohibition of selling tobacco products with aromas and other additives
– Prohibition of smoking in cars with a minor present
– Prohibition of smoking indoors including E-cigarettes
– Mystery shopping/test purchasing by underage,
– Measures of prevention of illicit trade

Hong Kong Department of Health Tobacco Control Zero Efforts

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Hong Kong Customs Enforcement Cases

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