Thu | Nov 23, 2017

Illegal cigarettes costing industry dearly

Published:Saturday | November 11, 2017 | 12:00 AMChristopher Serju
Marcus Steele (right), managing director of Carreras Limited, speaking about counterfeit cigarettes in the Market. Also in this photo is Superintendent Anthony McLaughlin of the Counter-Terrorism and Organised Crime Task Force.

Government's decision to increase the excise duty on a stick cigarette by $3 last March in order to improve on the $9 billion per annum in revenue it derives from the industry has misfired, with bootleggers, instead, profiting handsomely from a windfall in sales of counterfeit cigarettes, according to Marcus Steele, managing director of Carreras Limited, the industry leader in cigarette distribution and sales.

The fall-off in sales volume, which has hit Carreras hard since, is not because Jamaicans are smoking less, but because they are getting a much more affordable, as well as significantly more toxic smoke fix, the Carreras executive told journalists on Thursday. He displayed 17 illegal brands during a press conference at the company's new Kingston head office that are being openly sold in shops and bars across Jamaica.

Steele explained that this is because the multiplier impact of the $3 per stick excise duty increase has made cigarettes unaffordable for most smokers, with criminals offering a wide range of easily accessible and affordable options. He offered the breakdown as follows:

"The excise is $17 dollars a stick, customs administration fee is a dollar a stick. That's $18. And if you add 16.5 per cent GCT, we're talking about $21 a stick (increase). There is absolutely no way in the marketplace that you are able to pay your taxes as required by law and sell a 20-pack of cigarettes below $420. It is just not possible. All of these brands are being sold for less than $420.

"Based on just the three most popular illicit brands, the total projected revenue loss to the Government amounts to more than $1 billion (for fiscal year ending March 2018). It is estimated that the loss in revenue is greater than $2.6 billion when all other illicit brands, including counterfeit products, are considered," the marketing executive explained.

Police say arrest record of counterfeit cigarette sellers good

Emboldened by easy a vailability of the "cheap cigarette" smokers, retailers and wholesalers are cashing in on the illicit and unsafe product, which is easily identifiable. The graphic warning picture, which is mandated by law to be displayed at a scale of at least 60 per cent of the packaging size, is missing, while the labelling on some brands is written entirely in Spanish, a clear indication that it is contraband.

Despite this, Superintendent Anthony McLaughlin of the Counter-Terrorism and Organised Crime Task Force told the press conference that the police continued to enjoy good arrest and conviction rates, resulting in multimillion-dollar fines.

christopher.serju@gleanerjm.com