Illigal Cigarettes, $120 Million
An attempt to illegally import approximately four million sticks of Winston cigarettes into the island was foiled by the Customs Department which seized a 20-foot container of the contraband on the wharf. According to the Customs Department, the cigarettes, which have a street value of $120 million, originated from China. Customs also reported that the contents of the container were originally declared as plastic and Styrofoam cups and plates.
The bust was praised by local cigarette distributor Carreras Ltd which pointed out that had the cigarettes entered the Jamaican market, the country would have lost more than $70 million from the requisite duty and taxes being evaded.
Both Customs and Carreras pointed out that the trade in illegal cigarettes “contravenes the provisions of Trade Marks Act and Copyright Act; denies the Ministry of Finance of taxes authorised by law, and ultimately government revenues; and deprives the National Health Fund of revenues”.
“What we are witnessing with the rise in the illicit trade is a transfer in volumes from the formal legitimate tax paying tobacco distributor, to the underground illicit trade,” said Chris Brown, Carreras’ corporate and regulatory affairs manager. “The sad part is that, unlike us, these illicit traders pay no taxes.”
No one has been arrested in connection with the recent seizure. However, the Customs Department said that while it continues its investigations into this shipment, it “will vigorously continue its efforts in clamping down on the presence of illicit cigarettes in the Jamaican market”.
In April last year, a record $300-million worth of illicit Craven A cigarettes was seized by the authorities. The month before that, the Jamaica Customs Contraband Enforcement Team seized a 40-foot container with over 400 cases of illegal cigarettes which they said was valued at $120 million. At that time, it was disclosed that the container belonged to a well known area leader.
According to the authorities, organised criminal gangs and drug dealers are behind the trade in illicit cigarettes here.
Their transition from hard drugs, the Observer was told last year, is driven by their desire to avoid the harsh penalties associated with narcotics trafficking, even though breaches of the Trade Marks Act can attract huge fines and prison time. In addition, the trade in illicit cigarettes is said to have lower safety risks.
Yesterday, Carreras said that “this latest find at our border highlights the concern that the company has been publicly raising about the illicit trade in cigarettes”.
The company again pointed to what it said was the link between high excise levels and the impetus it gives to the illicit trade.
“The truth is, within the last two years we have seen a surge in the quantities of illegal cigarettes that have been confiscated or seized by either the Jamaica Constabulary Force or the Customs Department,” Carreras’ managing director Richard Pandohie said in a statement.
“Within that period as well, the company has been challenged by successive and excessive levels of excise increases, where in 2008, the company faced an unprecedented 100 per cent increase in the special consumption tax (SCT) on cigarettes, followed by another 42 per cent increase in May 2009 and most recently, a further 23 per cent increase in January 2010,” Pandohie added as he again commended Customs for cracking down on the illegal trade.
There are only two authorised distributors of cigarettes in Jamaica; Carreras Limited, marketer and distributor of the Craven A, Matterhorn, Dunhill and Rothmans brands; and Musson Jamaica Limited, marketer and distributor of the Marlboro and Green brands.
Last April, the Observer reported Michael Prideaux, director of corporate and regulatory affairs at British American Tobacco, as saying that the estimated world market for the illicit trade in cigarettes is 390 billion sticks per year, representing six per cent of total world cigarette consumption.
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