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February 7th, 2012:

LCQ8: Sale of illicit cigarettes

Hong Kong (HKSAR) – Following is a question by the Hon Wong Ting-kwong and a written reply by the Secretary for Financial Services and the Treasury, Professor K C Chan, in the Legislative Council today (February 8):


It has been reported that quite a number of traders are suspected of selling duty-not-paid cigarettes (illicit cigarettes) through a major shopping web site on the Mainland; as the retail price of these illicit cigarettes is 60% lower than that of genuine duty-paid cigarettes, and traders can deliver the illicit cigarettes through courier companies to the buyers’ residences in three days, thus quite a number of young people in Hong Kong are attracted to place orders. In this connection, will the Government inform this Council:

(a) whether it knows the details of the aforesaid online selling of illicit cigarettes (including the operation of online selling of illicit cigarettes, the monthly average sales volume, the number of local buyers and their main age groups, etc); if not, of the reasons for that;

(b) whether it had seized any illicit cigarettes smuggled to Hong Kong through courier service last year; if it had, of the quantity of illicit cigarettes seized, and the number of cases in which prosecutions were instituted; and

(c) what measures are in place to combat shopping web sites selling illicit cigarettes to Hong Kong people, and how enforcement will be stepped up to combat the smuggling of illicit cigarettes by couriers?



(a) The Customs and Excise Department (C&ED) has been closely monitoring illicit cigarette activities. Intelligence reveals that the sale of illicit cigarettes via internet is not common.

Last year, C&ED received only a single complaint regarding such activities in the local market. C&ED will continue to monitor the situation so as to prevent such illegal activities.

(b) In 2011, C&ED effected one case on the sale of illicit cigarettes via internet. One male offender was prosecuted with 600 sticks of illicit cigarettes seized.

There is so far no case on the sale of illicit cigarettes via Mainland shopping web site and delivered to Hong Kong by couriers.

(c) C&ED will take stringent enforcement actions against illicit cigarette activities. If the illicit cigarette activities involve Mainland websites, as these websites are operated outside Hong Kong, C&ED would refer such cases to the Mainland authorities for follow-up actions or appropriate preventive measures. Having regard to the mode of delivery adopted by such activities, C&ED will also step up inspection on import cargoes to prevent the smuggling of illegal commodities into Hong Kong.

Source: HKSAR Government

Smugglers Prosper in Spain’s ‘Perfect Storm’ for Tobacco Firms

February 07, 2012, 6:23 PM EST

By Manuel Baigorri

Feb. 8 (Bloomberg) — Spanish smokers, squeezed by higher taxes and a deepening recession, are increasingly relying on smugglers to feed their habit.

Illegal imports now account for 7 percent to 8 percent of Spanish cigarette sales, compared with almost nothing a year ago, according to the country’s tobacconists association. In southern provinces such as Cadiz, Seville and Malaga, the proportion is 20 percent.

“Smuggling and fake tobacco, which had been eradicated since 1993, came back strongly last year,” said Jaime Gil- Robles, corporate affairs director at Altadis, the Spanish unit of Imperial Tobacco Group Plc.

Smuggling, encouraged by a December 2010 increase in tobacco taxes and a ban on smoking in public places, has eroded both government coffers and company revenues. Spain, which has the European Union’s highest jobless rate, collected 14 percent less tobacco taxes in 2011 than a forecast of 9.05 billion euros ($12 billion), excluding value-added tax, according to Altadis.

“The fiscal policy was disastrous as it forced an average increase of 50 euro cents per packet,” Gil-Robles said. “Add the crisis and skyrocketing unemployment to that and you have the best scenario for smuggling and illicit tobacco.”

In a single week last month, Spanish tax authorities seized more than a million illegal packets of cigarettes worth about 4 million euros. In December, officials said they confiscated 561,500 packets of fake Marlboro brand cigarettes which were imported from China and entered the country through the port of Valencia in a container marked “synthetic fiber.”

‘Tremendously Worrisome’

The increase in smuggling is “tremendously worrisome for the whole industry,” said Mario Espejo, chairman of the Spanish tobacco association, which represents more than two-thirds of the country’s 14,000 tobacconists.

British American Tobacco Plc, Europe’s biggest cigarette maker, estimates that 6 percent to 12 percent of the 5.5 trillion cigarettes consumed worldwide each year are obtained through illicit means such as smuggling, its website shows.

In Spain, the number of packets sold last year declined 17 percent to 3.02 billion from 3.62 billion in 2010, according to the Tobacco Market Commission. Altadis this month requested a two-year freeze on tobacco tax to help the market recover. (CTA : this shows conclusively that increased tobacco tax and enforcement of non smoking restaurants and pubs WORKS !)

In May, Altadis cut the price of Fortuna, Nobel and Ducados in Spain to maintain competitiveness after it sold 16 percent fewer cigarettes there in the first half of the fiscal year.

“Last year, there were three big shocks in Spain for the consumer: the tough economic environment, excise increases and the smoking in public spaces ban,” Alison Cooper, chief executive officer of Bristol, England-based Imperial Tobacco, said in an interview in Madrid. “That caused the perfect storm in terms of the Spanish market.”

Bleak 2012 Outlook

This year will again be “tough,” though declines may not be as steep, Cooper said.

Altadis has the biggest share of Spain’s cigarette market at 33.3 percent, according to the tobacco market commission. That compares with 30.7 percent for Philip Morris International Inc., 21 percent for Japan Tobacco Inc. and BAT’s 11.8 percent.

Philip Morris, the world’s largest publicly traded tobacco company, isn’t anticipating much improvement in Spain this year.

“The dynamics observed in the Spanish market in 2011, mainly the adverse economic circumstances and the high unemployment rate, are likely to continue in 2012,” the maker of Marlboro said in a statement to Bloomberg News.

The ban on smoking in public places, introduced at the beginning of last year, is another reason for the decline in tobacco sales, according to Alfredo Arahuetes, dean of the Economic Sciences and Business Administration School at Madrid’s Comillas Pontifical University.

Restaurant Sales Decline

“Lots of bars have seen their business damaged,” Arahuetes said by phone. “Prices here are also a bit lower than in other European countries so tourists come not only for the sun, beaches and parties, but also to take as much tobacco as they can.”

Tobacco prices in Spain should be matched with other European countries, while being removed from the list of products measured to calculate the consumer price index, said Antonino Joya, a director at consumer rights group OCU.

The northwest region of Galicia, along with Gibraltar in the south and Andorra in the north, are the main locations for smuggling, the tobacco association’s Espejo said, adding that the Canary Islands, which benefit from lower taxes, have become another hot spot. A 4.25-euro packet of Marlboro cigarettes can be bought for about 2.25 euros on the black market, he said.

Alvaro Alonso, a manager at Los Angeles restaurant in Madrid, said revenue has dropped 15 percent to 20 percent since the smoking ban was introduced.

“The economic crisis and the smoking ban are a having huge negative impact on this type of business,” 33-year-old Alonso said. “We are just trying to survive.”

For the government, the need to tackle smuggling is just as pressing as it seeks to tackle the euro area’s third-largest budget deficit, said the tobacco association’s Espejo. About 80 percent of the cost of a packet of cigarettes is taxes, he said.

“As a country, we can’t afford the luxury of losing so much money in taxes as we fight to cut the budget deficit.”

–Editors: Paul Jarvis, Sara Marley.

To contact the reporter on this story: Manuel Baigorri in Madrid at

To contact the editor responsible for this story: Kenneth Wong at

Smoking Slows Memory, Reasoning in Middle-Aged Men

By CARRIE GANN (@carrie_gann) , ABC News Medical Unit

Feb. 6, 2012

New evidence suggests that smoking isn’t only bad for the body but can also take a toll on the mind.

A study published today in the Archives of General Psychiatry linked smoking to faster, more dramatic age-related mental decline in men.

Researchers from University College in London studied more than 5,000 men and 2,000 women from Britain’s long-running Whitehall II study, which has surveyed the health of thousands of British civil service employees.

The researchers studied each participant’s performance on tests of memory, verbal skills and reasoning over a period of 10 years, beginning when the participants were about 56 years old. They found that men who smoked showed a greater decline in these mental functions than those who had never smoked.

Smoking seemed to speed up the cognitive aging process, making men function mentally as if they were 10 years older, said Severine Sabia, the study’s lead author.

“For example, a 50-year-old male smoker shows a similar cognitive decline as a 60-year-old male never-smoker,” she said.

The brain changes weren’t necessarily permanent. Men who stopped smoking more than 10 years before the tests performed as well as those who had never smoked. But men who kicked the smoking habit less than 10 years before the cognitive tests began didn’t do much better than the men who’d kept smoking.

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While smoking seemed to drain men’s brains, the researchers didn’t find a similar connection between smoking and declining mental function in women. Sabia said that could be because women in this age group smoked less than men do, or that there were simply fewer women in the study.

Researchers said there are several factors that could explain the connection between smoking and mental decline. One reason could lie in the way smoking affects the heart, lungs and blood vessels. Because smoking ups the risk of vascular disease, it could limit the body’s ability to deliver the blood, oxygen and nutrients the brain needs to function at its best.

Dr. Charles DeCarli, director of the Alzheimer’s Disease Center at the University of California at Davis, said differences in cardiovascular disease may also explain why the study found that men showed more cognitive decline linked to smoking than women did.

“Men have more heart disease and greater stroke risk than women do up until about age 70 or so. Part of that is related to lifestyle,” DeCarli said. “Men of this age group often smoked more than women did.”

Philip Harvey, a professor of psychiatry at the University of Miami School of Medicine, said the addictive nature of cigarettes may also take a toll on the brain, noting that molecules of nicotine in the brain latch onto the same brain receptors involved in attention, concentration and memory.

“That just may lead to a disregulation of those receptors, it may make them function less well,” Harvey said. “But that could mean that rather than some kind of long-term damage, it’s a reversible process that may involve resetting the receptors.”

The study’s authors said that smoking’s long-term effects on mental function are probably underestimated, since smokers are more likely to die of other health problems before they have the chance to develop dementia.