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Cigarette Smuggling

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

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

Download (PDF, 3.39MB)

Hong Kong Customs Enforcement Cases

Download (PDF, 19KB)

Tobacco stats for Hong Kong years 2013-2016

Clear the Air herewith provides our readers with Tobacco stats for Hong Kong years 2013-2016

sticks

The figures tell us that the Hong Kong Government preventative health measures are blatantly NOT WORKING.

The sales of duty paid cigarettes continue to spiral instead of decreasing.

The Government takes over $6 billion in tobacco excise taxes then throws only crumbs to tobacco control and prevention resources – the $6bn remainder goes to pouring white elephant concrete.

The excise tax is manifestly insufficient for a 1st world country with such a high cost of living. Hong Kong needs to match Australia, New Zealand, UK , Ireland excise tax levels to have a preventative effect.

Hence tobacco remains affordable to youth here whilst Government apathy and lack of political will to act reign supreme. A form of misconduct in public office for their failure of duty of care to the people.

Meanwhile there is no apparent political will to force a legislative change to place the onus on landlords to prevent smoking in their licensed premises (whereas on the Mainland they have such laws).

As long as people can go out and smoke in places of entertainment with negligible chances of being caught, they will continue to do so.

Abysmal state of affairs. The highly paid incumbents would have been fired long ago in a business enterprise.

Graphic health warning enlargement counterproductive to fight against illicit tobacco trade

http://harbourtimes.com/2017/01/11/graphic-health-warning-enlargement-counterproductive-to-fight-against-illicit-tobacco-trade/

A Hong Kong-based advocacy group has urged the government to step up enforcement against illicit tobacco trade while warning against measures that may jeopardise the positive trend.

Pollster Ipsos Hong Kong released in January a survey report on public perception of the black market cigarette trade. Commissioned by the Hong Kong United Against Illicit Trade (HKUAIT), the report interviewed about a thousand Hong Kong adult citizens in December 2016. Results show that 84% of the respondents take illicit cigarettes as a serious issue in Hong Kong.

Ipsos Director Mick Gordon highlighted that approximately three out of four respondents attribute the problem to sophisticated criminal networks, insufficient penalties and drastic excessive tax increases on cigarettes.

According to the latest Asia Illicit Tobacco Indicator 2015 report by Oxford Economics, Hong Kong’s illicit incidence has fallen by 6.7% since 2012 but remains at a relatively high level at 29.1%, amounting an estimated HK$2.9 billion tax loss in fiscal year 2015/16.

Don’t ruin it

While acknowledging Hong Kong Customs and Excise Department’s effort in combating illicit tobacco trade, HKUAIT advisor Jeff Herbert warned that the tax loss could in turn, fund criminal organisations and generate even greater indirect losses in terms of extra enforcement actions and prosecutions. Mr Herbert called for increased penalties, greater enforcement, public education and sensible tax rises amid negative factors such as ever rising costs of living and proximity to the mainland counterfeit market where about 60% of these cigarettes were transported from through land routes.

Meanwhile, Patrick Wong, Executive Director of HKUAIT, expressed concerns over a recent legislative proposal by the government to enlarge the size of health warnings on tobacco products from 50% to 85%, arguing that such a move would further reduce available space for tobacco manufacturers to print security and authentication features, resulting in a less secure supply chain which could facilitate illicit trade.

The LegCo Panel on Health Services will hold a special meeting to discuss the government’s proposal on 17 January, 2017.

“We’ve got to be very wary of doing anything that can aggravate trade and also the high risk of reversing what we have seen as a downward trend. The 85% graphic health warning which some people are advocating would only further cause market to deteriorate as it would be much easier to counterfeit the outside packaging,” Mr Herbert echoed.

Public support for combating black market cigarettes hits all-time high whilst public perception of its severity dips

Clear the Air (CTA) says:

The China Ratified FCTC Treaty mandates increasing tobacco excise tax a) in excess of inflation rate and b) at regular yearly intervals to make tobacco unaffordable to youth.

Most youths start smoking and nicotine addiction before the age of 18. Hence it is important they do not start – that would be the death knell for Big Tobacco which callously addicts children in the pursuit of increased profits.

Preventative health measures include tobacco excise taxation, plain packaging of tobacco products to remove attractive colours from the Silent Salesman (pack containers),
placing the onus on premises owners and licensees to stop people smoking in workplaces such as restaurants and bars, COMPREHENSIVE instead of piecemeal public smoking bans and legislation, point of sale display bans and licensing of tobacco retailers, raising the tobacco use and buying age to 21 (frontal lobe development in youth thinking patterns starts to change at that age) and mandating large graphic health warnings printed on the retail packs – these should be rotated at regular intervals.

The FCTC Treaty also requires that any contact with the tobacco industry by Governments should be solely to regulate them and such meetings should be held in public.

Moreover on a regular basis the tobacco industry are supposed under the FCTC legal binding instrument to provide information on what organisations and front groups they have been funding and any forbidden CSR Projects they have entered into.

This heinous industry seeks to addict children as replacement addicted customers for their older customers that are literally dying off.

Two in every three smokers will be killed by their addiction to the nicotine in tobacco.

Recognition of their front groups and those seeking to further the interests of Big Tobacco should be rejected, and they should be publically shamed for fronting for the merchants of death.

Worldwide, Big Tobacco uses the same tactics: they blatantly lie in order to protect their market share: in fact they are the source of smuggling genuine products which they refer to as ‘Transit’ or ‘General Cargo’

RICO convicted Racketeers (Big T) state:

– Tobacco smuggling will increase if excise tax is increased
– Plain packaging does not work
– Graphic warnings do not work, hides their trademarks
– What they do not advertise is they are RICO convicted racketeers

Clear the Air:

CTA: this is a crime prevention matter and handled by HK Customs very well
CTA: Australia has proven the exact opposite and many countries are now following this path
CTA: hundreds of peer reviewed scientific reports prove otherwise. Australian and UK courts overturned their appeals
CTA: FACT ! the US judgment is attached in the file

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http://hkuait.org/public-support-for-combating-black-market-cigarettes-hits-all-time-high-whilst-public-perception-of-its-severity-dips/

A survey conducted by Ipsos Hong Kong Limited (Ipsos), an independent opinion research specialist, reveals that whilst public perception of the black market cigarette problem dipped, a record number of respondents believe that increased government action is necessary to combat the illicit cigarette trade.

“Black market cigarettes cannot be eliminated by simply implementing one measure” said Jeff Herbert, advisor to the Hong Kong United Against Illicit Trade (HKUAIT). “In addition to considering stricter penalties and other measures such as strong minimum sentences, and increasing public education, the Hong Kong Government needs to ensure that it does not implement legislation such as drastic tax increases or excessive health warnings as international experience shows that these regulations could possibly reverse the downward trend of illicit cigarettes in Hong Kong.”

According to the latest Oxford Economics “Asia Illicit Tobacco Indicator 2015″ report, illicit cigarettes contributed to 29.1% of total cigarette consumption. However, while still accounting for nearly 1 in 3 cigarettes consumed in Hong Kong, the illicit cigarette trend has seen a gradual decline since recording at 35.9% in 2012.

In an Ipsos survey released today, Ipsos Director Mick Gordon highlighted that “the findings clearly show that approximately 3 in 4 respondents believe drastic increases in tobacco duty, insufficient penalties and sophisticated criminal networks contribute to the problem of illicit cigarettes in Hong Kong”.

“Tobacco duty revision rates, while important, is not the only regulatory measure that should be approached cautiously”, Jeff warns. “As a matter of principle, HKUAIT agrees that tobacco duty needs to be revised periodically. However, any increase should take into account prevailing social and economic conditions, reflected in the Government’s annual Consumer Price Index report”.

In May last year, the Food and Health Bureau issued a letter notifying selected stakeholders that it plans on pushing ahead with a legislative proposal that increases the size of health warnings on tobacco products from 50% to 85%.

“This legislative proposal is particularly worrying because we can foresee the direct effect it has on the illicit tobacco trade”, adds Patrick Wong, Executive Director of HKUAIT. Several stakeholders, including HKUAIT, have argued that the illicit trade of cigarettes will further proliferate if the proposed 85% graphic health warning is implemented alongside a requirement to insert tar and nicotine levels on side panels. Viewed together, available space for tobacco manufacturers to print security and authentication features is further reduced, resulting in a less secure supply chain and an environment that facilitates illicit trade.

The 85% health warning debate continues at the Legislative Council’s Panel on Health Services (Panel). Members of the public are invited to submit their views online (up to 10 January 2017). A special meeting of the Panel to discuss this issue has been scheduled for 17 January 2017.

This survey was commissioned by HKUAIT and conducted by Ipsos in December 2016. More than a thousand Hong Kong adult citizens participated in this survey. Over the last 4 years, HKUAIT has commissioned similar surveys to gauge the public’s perception of the illicit cigarette problem and how it may affect the lives of Hong Kong citizens.