Friday, November 14, 2014

Black market tobacco trade

Criminal tobacco operation at Irish Customs

Criminals are importing tobacco on the cheap to Cork and are putting it in to packets belonging to well-known brands.
Customs are warning that this tobacco is often mixed with other substances to make it go further.
Special machines are used to wrap the packets in cellophane, to make the product look genuine to the customer when it’s sold on the black market.

In one recent Cork seizure, equipment used to pack, roll-your-own tobacco with cellophane was found.
Nobody has yet been charged and a file has been sent to the DPP.
Equipment to actually make cigarettes from tobacco is also being used by criminals operating illegal cigarette supply networks here.

Almost 140kgs of tobacco and 1.1 million cigarettes have been seized in Cork airport and Cork port since January 2013.
In the recent budget, the price of 20 cigarettes rose to €10.
There is concern that the hike could lead more people to seek cheaper cigarettes and tobacco on the black market.
Currently, the typical price of a packet of 20 cigarettes on the black market is €4.

New tax cigarette cost

Philip Morris Fortune Tabacco Corp. Inc. said cigarette prices will increase in December following the implementation of the stamp tax law.

PMFTC Inc. president Paul Riley said prices of lower tier cigarettes, including  products of rival Mighty Corp, would eventually go up to comply with the sin tax law because of additional cost.

“If Mighty applies tax stamps on all their packs as required by law as of Dec. 1, then their prices in the market will have to increase.  We will hold them accountable for 100- percent tax stamp compliance,” Riley said in a statement.

Cigarette makers must purchase stamp tax strips from the Bureau of Internal Revenue for P0.13 each. This is on top of the P25 excise tax on premium cigarettes and P17 on low tier cigarettes.

British American Tobacco (Philippines) Ltd. has begun its transition to the new stamps on cigarette products, months ahead of the Jan. 1, 2015 deadline for importers to comply with the new system.

James Lafferty, BAT general manager, said the early stamp tax adjustment would ensure BAT’s compliance with law next year.

Lafferty said the new tax stamps had already been sent to the company’s manufacturing facilities abroad and would be affixed to the packs shipped to the Philippines beginning 2015.

Taxes will go up to as much as P30 from the unitary excise tax in 2017 and increase 4 percent yearly after that.

Despite the price increase, the Philippines will still be among the countries that sell cheap cigarette in Asia.

The BIR this year is looking at a 22-percent increase in excise tax collection from tobacco products and alcoholic drinks to P104.79 billion from P85.93 billion in 2013.

Riley earlier said the government collected its expected revenues from the sin tax but much more could be extracted from the tobacco industry if regulators strictly monitored the compliance.

Riley said the government should first ensure compliance to payment of regular and excise taxes before weighing additional regulatory requirements, referring to the minimum floor price for cigarette.

“How can this be possible when we cannot even monitor a single manufacturer who is under-declaring their production?” he asked.

Riley claimed the minimum price could be effective if the government efficiently monitored 700,000 retail outlets nationwide.

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