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Trade In Illicit Cigarettes Soars After 50pc Tax Increase

Clifford Lo, SCMP – Apr 10, 2009

Seizures of smuggled illicit cigarettes and sales of such cigarettes rose sharply last month, in the wake of the increased cigarette tax in February’s budget, the Customs and Excise Department said yesterday.

It reported a 127 per cent rise in cases of smuggling, distribution, sales and storage – from 126 in March last year to 287 last month. There were 639 cases in the first three months of this year, a 90 per cent rise from 336 in the same period last year.

There was also an increase in complaints from the public about solicitations to buy illegal cigarettes.

Seizures of illegal cigarettes rose by 11 per cent to 8.64 million cigarettes last month, from 7.77 million in March last year. The increase came after the introduction of the 50 per cent rise in tobacco tax in the budget on February 25.

Chow Chi-kwong, head of customs’ revenue and general investigation bureau, attributed the increase in seizures to stronger enforcement measures, which were mounted in anticipation of the sharp rise in smuggling.

“We deployed more officers to fight the illicit cigarettes problem,” he said. “That’s why we came up with more seizures and more cases.”

Seizures of illegal cigarettes also rose, to 18.48 million in the first three months of this year from 16.23 million in the same period of last year. Yesterday, Mr Chow announced the conclusion of a series of operations against illicit cigarette businesses that continued from March 1 to Wednesday. In that period, customs officers arrested 43 people, including 19 buyers, and seized HK$270,000 worth of cigarettes.

Officers also stepped up inspections at control points to stop smuggling from the mainland. They arrested five drivers and seized HK$17.75 million worth of smuggled cigarettes.

Officers found 16 storage areas for illicit cigarettes that were used to supply telephone orders. Nineteen people were arrested in the storage areas and HK$2.4 million worth of illegal cigarettes were confiscated.

Officers also arrested 67 people in 63 cases of telephone orders and deliveries, seizing HK$210,000 worth of cigarettes during the operation.

The department said it was getting an increasing number of complaints from the public about leaflets promoting the sale of smuggled cigarettes.

Mr Chow urged people to report such activity on customs’ 24-hour hotline on 2545 6182.

The maximum penalty for trading in illicit cigarettes is a HK$1 million fine and two years’ imprisonment.

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