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Cigarette Smuggling

Illegal-smokes trade flourishing

Jun 14th, 2011
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From: James Middleton [mailto:dynamco@netvigator.com]
Sent: Tuesday, June 14, 2011 06:45
To: ‘clifford.lo@scmp.com‘; ‘Ng Yuk Hang’
Cc: Quinton YK Chan; ‘raymond_ho@dh.gov.hk‘; commissioner@customs.gov.hk; ‘so_tco@dh.gov.hk‘; ‘Lai Vienna’
Subject: CustomsData2007-2010.xlsx

Dear Sir

I refer to your article below.

The article needs clarification as regards what quantity of contraband was intended for local sales.

In 2010, 29 million cigarettes were seized by Customs in HK port in transhipment to another country and not intended for sale here.

This shows a significant drop in local seizures of contraband. The salient fact remains that in the past two years 60-65% of local contraband were GENUINE products meaning the tobacco companies are the source of the problem.

This transhipment data reduces the number of local seizures significantly

Please correct and clarify your story as it is misleading to the public.

See attached self explanatory breakdown from the Customs Department.

Kind regards,

James Middleton

Chairman

www.cleartheair.org.hk

DOWNLOAD CUSTOMSDATA PDF : CustomsData2007-2010

(more…)

Meyercord Revenue, Inc., a SICPA Company, Unveils Next-Generation Excise Tax Solution to Aid Governments in Collecting Much-Needed Tobacco Excise Taxes

Jun 13th, 2011
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http://www.virtual-strategy.com/2011/06/13/meyercord-revenue-inc-sicpa-company-unveils-next-generation-excise-tax-solution-aid-gover

June 13th 2011

FUSON OASIS® system incorporates advanced anti-counterfeiting technologies, improved law enforcement tools and comprehensive support services

CAROL STREAM, Ill., June 13, 2011 /PRNewswire/ — Meyercord Revenue, Inc., a SICPA company, is introducing a new excise tax stamp solution to help curtail the counterfeiting of excise tax stamps and to enable state governments to more effectively collect owed tobacco excise taxes. The next-generation, heat-transfer FUSON OASIS® system includes new overt and covert security features that correspond to the highest available security industry standards for tobacco tax stamps protection and allow for quick and reliable authentication by law enforcement and the general public. The system was unveiled June 13, 2011 at the Federation of Tax Administrators’ annual meeting in Omaha, Neb.

“Advanced excise tax stamps are a cost-effective method to help governments collect the tobacco taxes due to states, counties and municipalities,” said Shelley Vereen, SICPA’s vice president of sales. “The stamps are also used as an investigative tool to help enforcement agencies prevent illicit trade and interstate smuggling efforts.”

Advances in digital technology and printing, however, have made it easier for criminals to counterfeit basic stamps and avoid paying taxes on tobacco products. In addition to costing necessary funding for capital expenditures and public services, the sale of black market cigarettes also finances organized crime and terrorist groups, according to government reports.

Excise tax stamps are used by government agencies to determine whether appropriate taxes have been paid on tobacco, alcohol or other luxury good products. Worldwide, SICPA provides solutions for over 45 billion excise tax-bearing products, helping governments collect more than $55 billion in excise taxes.

Advanced Security Features

The new heat-transfer FUSON OASIS® system improves upon the earlier-generation, heat-transfer FUSON® stamp, retaining those features of the stamp that remain effective today while addressing known vulnerabilities.  The original FUSON® stamp will be phased out over the next 12 months.

Advanced security features of the FUSON OASIS® include:

  • Proprietary color shifting ink, which enables consumers and retailers to identify authentic stamps without the aid of any tools, and enable an advanced polarizing effect, that requires the aid of a small credit card-sized validator or a specialized light source.
  • Using both short- and long-wave fluorescent inks in the watermark, adding complexity and cost to counterfeiting attempts.
  • Proprietary taggants that emit a unique secure signature which can be authenticated using a hand-held scanner.
  • Unique identification numbers for each stamp, allowing retailers and field auditors to quickly determine if packs of cigarettes have been properly stamped with authentic stamps.
  • Enhanced stamp chemistry that improves stamp adhesiveness on cigarette packs, decreases stamp flaking and allows for authentication techniques that do not damage the stamps.  The new chemistry also reduces Volatile Organic Compound emissions and improves the sustainability of the print process.
  • Microprint which deter the ability to reproduce a legitimate stamp’s text by photocopy or scanners.

Improved Enforcement Tools and Value-Adding Support Services

Meyercord Revenue’s new FUSON OASIS® system is more than a tax stamp. It also incorporates an online training tool for law enforcement personnel and auditors, tailored outreach programs to educate retailers and consumers about the stamp and how to report suspected counterfeits, and a suite of simple and effective enforcement solutions that allow for real-time authentication – ranging from low-cost, credit card-sized validators for retailers to do their own checks, to hand-held detectors used by law enforcement officials.

Also, for the first time, Meyercord Revenue is offering direct-to-distributor shipping, web-based ordering and approving on its Heat Transfer product line.  These services are designed to integrate seamlessly into governments’ electronic tax collection initiatives, helping to reduce costs, risk and paperwork.

“We are proud to offer states a solution that will significantly enhance their ability to identify and seize illicit products and increase tax collection,” said Charles Finkel, SICPA’s executive vice president. “Using the FUSON OASIS® system, retailers can easily authenticate tax stamps and be confident that the cigarettes they are selling have been properly taxed. What’s more, this stamp is applied to cigarettes using the same technology as the current FUSON® stamp, requiring no new equipment for distributors.”

About Meyercord Revenue, a SICPA Company

SICPA , founded in 1927 in Lausanne, Switzerland, provides high-tech security inks to most of the world’s currencies and has provided security inks for the U.S. Dollar for more than 30 years. SICPA purchased Meyercord Revenue, Inc. from Illinois Tool Works in September 2010 with the aim of providing more sophisticated solutions to aid state and Federal governments, ranging from basic tax stamps to full-collection solutions with advanced tracing features.

The new FUSON OASIS® stamp joins a suite of other tax collection solutions offered by SICPA including SICPATRACE®, which uses a state-of-the-art encrypted stamp with advanced tracking and tracing features that is currently used in California, Massachusetts and in other markets globally.

For more information visit www.SICPA.com.

SOURCE Meyercord Revenue, Inc., a SICPA company

Imperial Tobacco Australia Limited Submission regarding the Tobacco Plain Packaging Bill 2011 (Exposure Draft) and Consultation Paper

Jun 6th, 2011
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Download (PDF, 647KB)

70% of seized cigarettes pass through internal border, says NCA chief

Jun 2nd, 2011
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02 June 2011 | 13:47 | FOCUS News Agency

Home / Bulgaria

Sofia. 70% of the seized cigarettes pass through the internal border, while 3% – through the border with Turkey. Small percent of the seized cigarettes come from Serbia and Macedonia and the same is valid for cigarettes with paid excise duty in another country, which are just being transported,” said National Customs Agency Director Vanyo Tanov, speaking at an international conference themed Fight against contraband cigarettes in the Balkans, FOCUS News Agency reporter informs.

In Vanyo Tanov’s words, over the last 5 years there is a tendency for increase of the fight against cigarette smuggling.

In 2011 and 2010 the customs have seized a record amount of illegal cigarettes.

“The seized cigarettes without excise stamp are 64% of the entire amount, followed by duty-free cigarettes and only 1% of the cigarettes are with foreign excise stamp,” Tanov remarked.

“One-fourth of the seized cigarettes are aimed for illegal trade in Bulgaria, while the rest – for other EU countries,” Tanov added.

http://www.focus-fen.net/index.php?id=n251324

Sydney flooded with illegal cigarettes

May 30th, 2011
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http://www.dailytelegraph.com.au/

May 30, 2011

Illegal cigarettes on sale in Sydney shops. Journalist Joe Hilderbrand buys chop smokes. Intershop illegally imported cigarettes sold from under the counter. Pic. Stephen Cooper Source: The Daily Telegraph

SYDNEY is flooded with blackmarket cigarettes selling for as little as half the price of a genuine pack, but peddlers are avoiding punishment because it is tobacco companies who catch them.

The Daily Telegraph was able to purchase Chinese-made counterfeit cigarettes from outlets at Kings Cross and Warwick Farm.

British American Tobacco (BAT) conducts about 1000 undercover purchases each year and has taken legal action against more than 100 retailers in the past three years, effectively suing them for copyright infringements.

The Daily Telegraph was told this coincided with a drop-off in the number of inspections and prosecutions by the Australian Taxation Office (ATO), which is putting resources into chasing high-profile millionaires through Project Wickenby.

Illegal retailers caught by the ATO would have to pay five times the excise they avoided, plus fines and possible jail time.

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In the year before Wickenby began, the ATO completed 53 tobacco prosecutions and had another 24 in progress. Last year it completed just seven.

Sources said it was left to tobacco companies to regulate the industry, serving notices on businesses for copyright infringement. Lawyers for BAT demand restitution for the estimated lost income and the retailers are told not to do it again.

In some cases counterfeit cigarettes are disguised to look like known brands – Winfield is a popular choice – and in others the brands are fabricated.

In just five visits to suspect shops, The Daily Telegraph was able to purchase an $80 carton of Winfield Blues from a Kings Cross tobacconist and three packets of tax-free cigarettes labelled “Intershop” from a Warwick Farm store for just $8 each.

The illegal import and sale of tobacco products led to $1.1 billion in lost tobacco excise and GST to the federal government

Government to clamp down on tobacco smuggling

Apr 27th, 2011
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April 27, 2011

Tough new plans to tackle the illicit tobacco trade have been published by HM Revenue & Customs (HMRC).

Under the new strategy, supported by the UK Border Agency, the Government has provided additional investment for more officers to target organised criminals who smuggle tobacco. There will be increasing numbers of prosecutions, more illicit tobacco will be seized, and smugglers will face fresh hard-hitting financial sanctions. Minimum indicative levels for travellers bringing tobacco into the UK from the EU will also be reduced, aligning the UK with levels elsewhere in Europe.

Justine Greening, Economic Secretary to the Treasury, said: “The Government believes that tobacco smuggling must be tackled head on. Tobacco fraud costs taxpayers more than £2bn a year, depriving the public of revenue to fund vital public services.”

“We have made an additional £917 million available to HMRC to tackle evasion, avoidance and criminal fraud across the tax system, and that includes illicit trading in tobacco. Those who think that tobacco smuggling is a quick, easy and risk free crime that will go unchallenged, are making a serious mistake.”

Key changes under the new strategy include:

increasing our criminal intelligence and investigation resources deployed on tobacco fraud by 20% to prosecute more of those involved in smuggling at all levels;

expanding our successful overseas network of fiscal crime liaison officers to increase seizures of illicit cigarettes targeted on the UK by 20%;

introducing new technology, intelligence and detection capability to improve our ability to respond more flexibly at the border and inland;

pursuing proceeds of crime and applying new powers of assessment and penalties, including recovering lost taxes and charging penalties up to 100% of the tax evaded, to deter offending and prevent re-offending;

reducing the minimum indicative levels for personal imports to 800 cigarettes and 1 kg hand-rolling tobacco in the autumn, bringing the UK into line with all other EU Member States. These levels are used as a guide for determining whether tobacco products imported from the EU are for personal use.

http://www.easier.com/88187-government-clamp-down-tobacco-smuggling.html

Treasury to cut holidaymakers’ personal tobacco allowances in £2bn tax clawback effort

Apr 27th, 2011
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The number of cigarettes holidaymakers may bring back from Europe without attracting questions from Customs officials is to be cut by more than two-thirds as part of a Treasury attempt to claw back some of the £2.2bn in tax lost to tobacco smuggling every year.

The proposed change, which sets a guideline limit of 800 cigarettes and 1kg of rolling tobacco, will reignite a battle with campaigners such as smokers’ rights group Forest. Simon Clark, director of Forest, described the move as “shocking”, noting that current limits of up to 3,200 cigarettes and 3kg of rolling tobacco were set in 2002 after an attempt to clamp down further met with outrage and legal challenges.

Treasury minister Justine Greening is to set out plans to slash existing guideline limits, bringing them in line with Ireland and many other parts of Europe. “It doesn’t actually change the rules,” she said. “People who are holidaymakers or travellers from the UK, who maybe want to bring back some cigarettes when they come home for personal use, they are not affected at all. But we do believe this will do is start to deter those people who are actually just using minimum indicative levels as a way of bringing in wholesale amounts of cigarettes.”

“The levels people [will still be able to] bring in are more than enough for their own personal use – that is not something we would, or should, challenge.”

This claim was immediately challenged by Clark said: “The Labour government was forced to increase the limit from 800 to 3,200 because there was chaos at airports and ports around the country, with goods and vehicles being seized all over the place. We have absolutely been there with the 800 guideline. It didn’t work.”

Under European law, smokers bringing in tobacco merely have to convince Customs officials it is for personal use. Official guidance, however, sets the level at which suspicion is cast on personal imports.

In 2002, when then chancellor Gordon Brown sought to impose a maximum guideline of 800 cigarettes, an opposition campaign won enthusiastic support from sections of the media. The Sun newspaper claimed it had been victorious when the level was increased to 3,200 after a series of stunts including sending its own bus, full of page three girls, to head a protest convoy of cross border shoppers to Calais. The Treasury also faced a legal challenge from cross-Channel operator Hoverspeed.

This time, Greening is confident she has the support of the tobacco industry and believes a guideline limit of 800 cigarettes – commonplace across the continent – is well established in European law. Campaign group Action on Smoking and Health is also supportive.

The Tobacco Manufacturers Association said it would not oppose the reduced guideline limits but noted the move would not be welcomed by low-income smokers, coming a month after heavy price rises imposed in the budget. Paul Stockall of the TMA said the budget imposed the steepest price rises on cheap cigarettes and rolling tobacco, the price of a packet of 20 cigarettes and a 25g pouch rising around 10% to £5.64 and £7.34 respectively.

“We would expect non-duty-paid [smuggled cigarettes] sales to increase,” he added.

More than one in 10 cigarettes smoked in the UK is smuggled or bought legitimately by overseas travellers. The figure for rolling tobacco is almost half. Tobacco sales nevertheless generate £8.8bn in tax each year for Treasury coffers.

The controversial move to lower guideline limits for returning holiday-makers is part of a broader package of measures which will see a 20% budget increase for Revenue & Customs’ 685-strong anti-smuggling team. Additional resources will primarily be focused on intelligence operations overseas, where seizures exceeded 1bn cigarettes for the first time last year.

The biggest loss to the Treasury comes from counterfeit tobacco products and so-called “illicit white” – brands manufactured for overseas markets and smuggled into the UK, the most prevalent of which is Jin Ling, which is made in Kaliningrad, Russia.

Deborah Arnott, chief executive of Action on Smoking and Health said: “ASH welcomes the much of HMRC’s new strategy particularly increased investment in tackling smuggling. However, there is too much weight placed on collaboration with the tobacco industry which has historically been a major driver of smuggling, and no reference to the UK’s obligations to protect tobacco control from the vested interests of the tobacco industry. And there is no clear ambition for the size of reduction in the illicit market which they expect to achieve from this increased investment.”

http://www.guardian.co.uk/business/2011/apr/27/clampdown-on-duty-free-tobacco-limits/print

Plain packaging of cigarettes: a review of the evidence

Apr 1st, 2011
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Executive summary

This paper presents the findings of research over two decades and across five countries on the topic of plain packaging. It includes the results of more than 25 published experimental studies which have examined the likely impact of plain packaging on young people and current smokers (Section 5) [1]. It also summarises the results of research papers that analyse industry arguments about barriers to legislation resulting from international law and trade agreements (Section 7).

The main findings from this compilation of literature are as follows:

In a worldwide environment of increasing prohibition of tobacco advertising and sponsorship, the cigarette pack has become the key marketing tool employed by the tobacco industry to attract and retain customers. (Section 3)

The tobacco industry uses cigarette pack technologies and innovations in design to communicate particular attributes about each brand and by extension the personality and social status of its users. (Section 4)

Current pack colours and imagery can dilute the impact of graphic health warnings. (Section 5.2.1)

Unregulated package colouring and imagery contribute to consumers’ misperceptions that certain brands are safer than others. Removing colours from cigarette packs and misleading terms such as ‘smooth’, ‘gold’ and ‘silver’ would reduce false beliefs about the harmfulness of cigarettes. (Section 5.2.2)

Adults and adolescents perceive cigarettes in plain packs to be less appealing, less palatable, less satisfying and of lower quality compared to cigarettes in current packaging. Plain packaging would also affect young people’s perceptions about the characteristics and status of the people who smoke particular brands. (Section 5.2.3)

Plain packaging featuring larger graphic health warnings (75% front of pack) will both reduce the appeal of the pack and strengthen the impact of the warnings. (Section 5.2.4)

British American Tobacco has claimed that the legislation will not be effective, pointing to the results of an international analysis it has commissioned (and provided data for) on the impact of health warnings on sales. Health warnings have a different objective to plain packaging and monthly variations in sales data are not an appropriate indicator of effectiveness. In any case the data on which this analysis is based is highly selective and the specifications of the modelling incorrect in at least one important respect. (Section 7.1).

The Alliance of Australian Retailers alleges that plain packaging would damage retailer business, increasing transaction time at the counter due to difficulties in differentiating between brands. The AAR suggests that as a result, customers would switch to discount outlets. However, any loss of convenience at retail outlets will apply equally to discount and convenience outlets. Measures including labelling of the containers where packs are stored and brand names printed on packs in a clear font style and size would assist retailers to quickly indentify and retrieve particular brands. (Section 6.3 and 7.2)

The tobacco industry claims plain packaging represents an acquisition of intellectual property and as such is prohibited under the terms of various international trade agreements. The industry has suggested the Australian Government would be forced to compensate the industry in billions of dollars. Papers by experts in constitutional and trademark law on the other hand suggest that international agreements permit governments to restrict use of trademarks to protect public health. They advise that plain packaging will not be an acquisition of intellectual property, as the Government does not intend to use the logos or brand imagery; it will simply be restricting the use of these marketing tools on cigarette packages. If Courts were to rule that restriction of use of trademarks was an acquisition of property, then the legislation has been drafted to allow the use of trademarks with limitations. (Section 7.3)

Plain packaging has been carefully considered and researched in Australia and overseas for some 20 years, but contrary to claims by tobacco companies it has not been abandoned as a policy option. The paper provides links to statements by parliamentarians in New Zealand, the United Kingdom and the European Union, which are all either undertaking public consultation on plain packaging or have named plain packaging among proposals for future tobacco control strategies. (Section 7.4)

Companies have claimed that the legislation will reduce price and competition in the market. Opinions of industry analysts about the likely effects on competition are mixed. As pointed out by Deloitte MCS, future governments have open to them the option of further increasing excise and customs duty on tobacco products should average prices of tobacco products fall. (Section 7.5)

Tobacco industry claims that plain packaging will increase illicit trade are exaggerated and misleading. The industry’s estimation of the current size of the illicit market in Australia (15.9%) is based on one very small survey (949 people) with a very low response rate. The Government’s National Drug Strategy Household Survey of more than 23,000 people suggests that only about 0.3% of Australians (1.5% of smokers) use unbranded tobacco products ‘half the time or more’. The Australian Government’s draft plain packaging legislation specifies that anti-counterfeiting markings will be permitted on plain packaging, and the Australian Taxation Office and the Australian Customs and Border Protection Service should and no doubt will continue to vigorously pursue technologies and other surveillance and enforcement strategies to prevent the evasion of excise and customs duty in this country. (Section 7.6)

In summary there are strong grounds for believing that current packaging glamourises smoking and that tobacco products packaged in a standardised colour, typeface and form would:
improve the effectiveness of health warnings reduce misconceptions about relative harmfulness of various brands and reduce the overall appeal of smoking

The intensity of opposition to plain packaging legislation by tobacco companies suggests that tobacco industry executives believe that such measures will reduce sales and company profits.

Brisbane Customs and Border Protection Seize Shipping Container from Hong Kong Containing Illegally Imported Tobacco

Mar 9th, 2011
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Brisbane, Queensland, Australia (News4us.com) March 09, 2011

Brisbane Customs and Border Protection Seize Shipping Container from Hong Kong Containing Illegally Imported Tobacco

Minister for Home Affairs Brendan O’Connor today revealed more than 2.5 million illegally imported counterfeit cigarettes have been seized by Customs and Border Protection in Brisbane.

“This is a large seizure that represents an attempt to evade government revenue of almost $1.2 million,” Mr O’Connor said.

“While cigarettes and tobacco are not illegal items in Australia, it is against the law to fail to declare what is being brought into Australia and duty evasion is also illegal,” he said.

Counterfeit products can also be subject to civil action from the registered trademark owners.

“Customs and Border Protection is constantly assessing imports to Australia at our sea ports, as well as airports and postal centres, to catch people who seek to break Australia’s laws.”

In February, Customs officers at the Brisbane Container Examination Facility identified risks associated with a shipping container from Hong Kong that was marked by the importer as holding bubble wrap and lunch boxes.

Customs officers conducted an initial container x-ray and due to the scan showing inconsistencies, the goods were unpacked and a physical examination uncovered 2.5 million cigarettes.

Investigations are continuing into this matter.

Under the Customs Act the maximum penalties for smuggling and evading duties is five times the amount of duty evaded or $110,000, whichever is greater. Customs and Border Protection can also lay charges under the Criminal Code Act that can attract penalties of up to ten years jail.

“This seizure is a credit to hardworking Customs and Border Protection personnel and the state-of-the-art Container Examination Facility,” Mr O’Connor said.

Tobacco smuggling and counterfeit cigarette production are problems worldwide.

Over the past four years, Customs and Border Protection has seized 977 tonnes of tobacco and 286 million cigarette sticks in sea cargo. This has prevented potential revenue evasion of approximately $397 million.

Customs and Border Protection continues to work with international partners, law enforcement agencies and industry to combat illegal importation of tobacco and counterfeit cigarette production.

http://www.news4us.com/brisbane-customs-and-border-protection-seize-shipping-container-from-hong-kong-containing-illegally-imported-tobacco/227959/

Illicit trade of tobacco in Australia

Feb 1st, 2011
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