Tue | Jun 22, 2021

Government losing billion$ in illicit tobacco trade

Published:Friday | June 8, 2012 | 12:00 AM

Nedburn Thaffe, Gleaner Writer

Local cigarette company Carreras says while it continues to pay out hefty sums in taxes each year, companies involved in the underground trade of tobacco and tobacco products are getting off scot-free with billions of dollars that could be collected in tax revenues.

The company said police were also noticing that a lot of the players in the illicit trade were once linked to other trans-national crimes. As such, it believed that the Government should step up its effort to clamp down on the illicit trade.

"Based on the studies that we have seen, the Government is losing in the range of $3-$4 billion per year in terms of the taxes related to the industry," Carreras Managing Director Richard Pandohie told a Gleaner Editors' Forum at the newspaper's North Street, central Kingston, offices yesterday.

"The Organised Crime Unit (of the Jamaica Constabulary Force), they have shown that there is a clear link between this type of smuggling activity and other forms of organised crime," Pandohie said.

"You find that the same guys are linked to the gun network. People are moving from the hard drugs, where it is clearly a crime, to smuggling things like cigarettes, etc, where it is more considered to be like a soft crime. The penalties are light and most people just turn a blind eye to it."

Excise rate to blame

In the meantime, manager of corporate regulatory affairs at Carreras, Christopher Brown, said within the last three years the company has taken note of a rapid increase in illegal cigarettes entering the country's port. He said the heavy excise duty on tobacco was partly to blame for the increase in the illicit trade.

"Within the last five years, we have had about four or five consecutive levels of excise increases. What this contributes is to the whole emergence of the illicit trade in cigarettes."

With this in mind, the tobacco company said it was in the best interest of the Government to meet with the legal players in the industry on any discussion relating to the impending tobacco legislation.

"If the authorities are not having a comprehensive approach in looking on the whole issue of the industry, then the unintended consequences are going to be defeating both the revenue agenda that they have and also the health agenda."