Tanzania – Electronic Tax Stamp Pushes Up Revenue By 34%

THE use of Electronic Tax Stamps (ETS) for excisable goods have contributed to a 34 percent increase in revenue collected on branded products.

Due to the increase, the Tanzania Revenue Authority (TRA) has already rolled out the second phase which saw ETS being stamped on soft and carbonated drink plus bottled water.

TRA Deputy Commissioner General, Mr Msafiri Mbibo made the remarks during the on-going 44th Dar es Salaam International Trade Fair (DITF).

Mr Mbibo said since the system was introduced it has proven success showing improvement in revenue collections in which there is an increase of 34 percent.

ETS replaces the former paper stamp system, which was cumbersome and prone to human error, allowing certain tax-related malpractices to slip through the cracks.

This is one of the government’s moves geared towards improving tax administration in the country.

“We are glad that ETS shows improvement in the collection of excise duty and Value-added Tax (VAT), in the first quarter of the 2019/20 financial year the collection rose to 35.3 per cent on domestic spirits and wines compared to the corresponding period of last year,” he noted.

The taxman garnered 25.8bn/-as excise duty and VAT from domestic spirits and wines during the first quarter of the 2018/19 fiscal year, but the amount rose to 34.96bn/- during the first quarter of the 2019/2020 financial year.

Excise duty and VAT on cigarettes rose by 5.6 percent during the first quarter of the 2019/2020 financial year compared to a similar period last year.

TRA collected 56.7bn/-as excise duty and VAT on cigarettes from July to September 2019, a 3bn/-increase from a similar period of the previous financial year.

For the soft drinks, the amount collected as excise duty and VAT during the two months of August and September 2019 was 18 percent, higher than what was garnered during a similar period in 2018.

TRA collected 16.155bn/-in excise duty and VAT on soft drinks in August and September 2018, but the amount rose to 19.05bn/-during the period between August and September 2019.

Mr Mbibo said ETS has helped to eliminate counterfeit products from the market. It is, nonetheless, a promising move by the Government, and manufacturers and intellectual property owners should have reason to smile.

Commenting on how TRA is planning to ensure the surge the tax base, Mbibo said they will continue to develop friendly tax collection mechanisms so that everyone can enjoy voluntary taxation.

ETS first phase commenced on 15 January 2019 and affected cigarettes, wines, spirits, beer and all other alcoholic beverages.

The second phase began on 1 August 2019 and applied to products such as sweetened or flavoured water and other non-alcoholic beverages, except for fruit or vegetable juice.

The Regulations require each manufacturer to install an electronic tax stamp management system.

A Swiss-based firm SICPA has been contracted by the Tanzania Revenue Authority (TRA) to install and enroll all manufacturers, producers and importers onto the system.

Source: Daily News (Tanzania), 8 July 2020

Illicit cigarette use declines in EU but production rises

The consumption of illicit cigarettes fell below 8 per cent of total cigarette use last year, but was still equivalent to nearly 39bn smokes and €9.5bn in lost tax revenues, says a new report.

The latest edition of the annual study – carried out by KPMG on behalf of tobacco giant Philip Morris International – also found that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

Illicit ‘whites’ with no country specific labelling – i.e. legally produced cigarettes that are smuggled and traded illegally, often through free trade zones (FTZs) – remain the largest element of the counterfeit and contraband (C&C) category, representing 23.1 per cent of total EU illicit consumption or 9bn cigarettes.

Counterfeit of brands owned by manufacturers participating in empty pack surveys grew to 7.6bn cigarettes, an increase of more than 38 percent over 2018’s figure, and is the highest level ever recorded by KPMG. Counterfeit consumption was the highest in the UK and Greece.

The overall picture is one of increasing sophistication by the criminal networks behind the illicit trade, with multiple production units to compensate if one is raised, and increasingly high tech manufacturing equipment. New groups are also emerging that are focusing specifically on smuggling raw and fine cut tobacco.

“Illicit manufacturers are producing counterfeit, established and new illicit white brands to order at scale for organisations and smugglers who can arrange distribution of large volumes, either in large shipments or increasingly via high frequency, low volume shipments,” says KPMG.

Criminal groups are exploiting new distribution channels, such as rail, as it is faster than traditional shipping routes, as well as courier packages which are small and hard for law enforcement to detect, according to the report.

“The continued decline of illicit tobacco trade in the EU is a positive development and reinforces the importance of supply chain control measures, strict enforcement, and collaboration in combating this issue,” said Alvise Giustiniani, vice president of Illicit Trade Prevention at PMI.

However, while considerable efforts have taken place to stem contraband cigarettes from flowing into the EU, “we are once again seeing criminal organisations shifting their operations to stay one step ahead of anti-illicit programmes, according to the company.

Source: Phil Taylor, Securing Industry, 26 June 2020

The Illicit Tobacco Trade in Zimbabwe and South Africa

The following report (Working Paper) was issued in March 2019, a while back, but should not be considered too outdated for analysis and consideration, nevertheless.

A study was conducted to explore how the illicit trade in licit goods supports organized crime, corruption, and erodes state structures. The illicit tobacco trade in southern Africa occupies a prominent place in southern African politics, due to its prominent role in the ‘state capture’ scandals that characterized politics in South Africa between 2013 and 2018. Indeed, the illicit tobacco trade occupies a prominent place in public debate in South Africa, both about crimes that may have been committed in the last five years, and about how the current administration responds to the illicit economy right now.

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It then identifies ‘good-faith actors,’ primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practi- cal solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. The paper contributes to expanding awareness among policymakers and the public of the nexus between the illicit trade in licit goods, corruption, and organized criminal networks.

Download the Report via this link.

Source: Atlantic Council

New Zealand Customs – announces new laws concerning the importation of Tobacco Products

When you import or bring tobacco products into New Zealand, you must comply with New Zealand laws. You must pay all relevant taxes on your imported tobacco at the border.

From 1 July 2020, tobacco products, tobacco leaf and tobacco refuse will become prohibited imports and you will be required to have a permit to import these products.

Permits are approved and issued by Customs. That means if you want to send someone in New Zealand any kind of tobacco product including as a gift, you will have to apply for a permit.

Also from 1 July 2020 you cannot receive any tobacco products through the international mail. Tobacco must only be imported using a freight forwarder, the fast-freight courier system or as bulk sea or air cargo. You will still be able to use New Zealand Post’s international courier service.

Customs will issue a permit to established importers for one year from 1 July or the length of time a manufacturer holds a licence to manufacture tobacco products. Other importers will need to apply for a permit.  Permits will be issued free of charge. 

From 1 July 2020, any tobacco products, leaf or refuse imported without a permit will be seized and destroyed. Customs will send a written notice to importers confirming the seizure and destruction of the tobacco products, leaf and refuse. In the unlikely event of the product being seized and destroyed in error (for example, when the person had a valid permit to import), the importer will be entitled to compensation for the customs value of the products.

A permit is not required to import cigars, cigarillos, water-pipe tobacco, chewing tobacco, snuff and snus.

Passengers arriving into New Zealand with tobacco do not need a permit and individual duty-free tobacco limits are unchanged. More information about duty-free limits and FAQs are available to download.

Source: New Zealand Customs Service, 22 May 2020

Illicit Cigarettes – Hong Kong customs intercepts four shipping containers

Photo: Winson Wong

Hong Kong customs has uncovered HK$85 million worth of smuggled cigarettes in the largest seizure of its kind in two decades, after authorities acted on intelligence indicating a syndicate was shipping the haul into the city in four containers.

Some 31 million cigarettes were stashed in the containers from Yokohama in Japan. They were then shipped through different ports in South Korea, Vietnam and mainland China, according to Lee Hoi-man, deputy head of the Revenue and General Investigation Bureau under customs.

He said the circuitous route was used by smugglers to avoid detection.

“The containers were shipped into three to four different ports before they came to Hong Kong,” Lee said adding that the contents listed on import documents were changed to throw off law enforcement in various jurisdictions.

Four men – one mainlander and three Hongkongers – aged between 24 and 41 were arrested in the operation on Monday. They were still being held for questioning on Tuesday evening.

Information on the containers was shared to a global database operated jointly by customs from different countries, under an anti-smuggling campaign code-named “Project Crocodile”.

A law enforcement source said the containers were left idle at another port since December, but were then suddenly moved across different countries before arriving in Hong Kong, one at a time since last Friday.

Lee said: “It is possible smugglers believed our frontline officers were tied up in dealing with the coronavirus outbreak.” He added that some of the contraband items were believed to be destined for countries in eastern Europe as some cigarette brands seized in the operation were popular there.

Hong Kong customs began investigating the syndicate in mid-December before identifying the four containers.

On Monday afternoon, officers from the Revenue and General Investigation Bureau swooped into action and seized 22 million sticks of cigarettes stashed in three containers at yards in Yuen Long, Sheung Shui and Man Kam To, arresting the four men.

At the Sheung Shui site, officers also seized 3,500 bottles of duty-not-paid liquor worth HK$2.5 million.

On Tuesday, the fourth container which had arrived from Shenzhen a day before was selected for inspection. Nine million cigarettes were found in it.

Lee said the combined haul had an estimated street value of HK$85 million, and was the biggest seizure of its kind in two decades in a single operation.

He said his team was working with overseas counterparts to determine the exact origin of the shipment and track down the ring leader and core syndicate members.

In Hong Kong, importing or exporting unmanifested cargo carries a maximum penalty of seven years in jail and a HK$2 million fine.

Source: Article by Clifford Lo, South Morning Post, 18 February 2020

Cigarette Smuggling in Logs

Zim Revenue Scourge – porous borders lose millions

cigarettes

The Zimbabwe Herald suggests that Zimbabwe could be losing millions of dollars in unpaid taxes due to rampant smuggling of cigarettes into South Africa, investigations by this paper have revealed.Between 2014 and 2015, local customs officials seized nearly 2 500 cartons worth around $500 000 in taxes, according to the Zimbabwe Revenue Authority.

Figures from the South African side are staggering, showing a wide discrepancy in the value of confiscated contraband between the two neighbouring southern African countries.

The South African Revenue Service told The Herald Business that it had seized R87 million (US$6,2 million) worth of Zimbabwean cigarettes since 2014, or 95 million sticks.

This will likely be worth millions of dollars in evaded tax in Zimbabwe, but the ZIMRA director for legal and corporate services Ms Florence Jambwa said the figures were difficult to determine because smuggling was an underground trade.

South Africa, however, says it loses an estimated R40 million (US$2,9 million) to cigarette smuggling each year, on the average, more than half of it Zimbabwe-related.

And this is just from what is on public record. Customs officials from both countries admit the figures could be higher. Both are also greatly incapacitated to detect illegal trades quickly.

“It is difficult to measure the levels of smuggling as this is an underground activity mostly done through undesignated entry points,” said ZIMRA’s Jambwa, by email.

“The value of the potential loss cannot be easily ascertained,” she said, failing to provide an estimate.

Tax analyst Mr Tendai Mavhima said the figures from ZIMRA represent only a small portion of the actual amount of money Zimbabwe is losing to trafficking of cigarettes.

“The disparity in figures (ZIMRA and SARS figures) indicate there are problems in controls on either side, which may result in the revenue and tax losses from both countries being understated,” he said by telephone.

Zimbabwe is the world’s fifth largest producer of tobacco after China, the USA, Brazil and India.

The country produces flue-cured Virginia tobacco, considered to be of extremely high quality and flavour, according to a report on Zimbabwean tobacco companies by local stockbroking firm, IH Securities.

As such, Zimbabwean tobacco ends up in many top cigarette brands across the world, it says.

It is especially popular in China, the largest importer of Zimbabwean tobacco, and in South Africa, the country’s largest trading partner.

In South Africa, Zimbabwean cigarettes are on demand for two key reasons: high quality and affordability.

It costs just $1,50 for 20 sticks in Zimbabwe compared to $3,20 for the same number of sticks in South Africa, according to estimates by regional economic bloc, SADC.

The South African Revenue Service (SARS) said: “Cigarette clientele opt for cheaper cigarettes. The high supply and demand for illicit cigarettes creates the market for it.”

South Africa imposes very high taxes on cigarette imports – about 80 percent meaning many Zimbabwean dealers choose to export illegally.

SADC says illegal dealers supply nearly two thirds of the number of cigarettes smoked by South Africans.

In 2011 alone, at least 4 billion cigarettes smuggled into South Africa originated from Zimbabwe, it says.

The undeclared cigarettes are usually concealed in trucks, buses and other vehicles destined for South Africa by organised cartels, said Florence Jambwa of ZIMRA.

Sometimes the cargo is shipped at undesignated points on the porous border between the two countries. Source: Zimbabwe Herald

Africa losing $40bn in illegal cigarette trade

ContrabandA tobacco body has urged African governments to stamp out illegal tobacco trade, as their economies are losing billions of dollars in taxes annually. Tobacco Institute of Southern Africa (TISA) revealed that governments in the region are losing between US$20 billion and US$40 billion annually in taxes as a result of illegal tobacco trade, hence the need for collaboration among stakeholders to curb the vice.

This is contained in a statement issued by KPR Consulting Limited on Friday. “The size of the global illegal tobacco trade ranges between 330 and 660 billion cigarettes a year. These are cigarettes that are either smuggled, counterfeited or where tax is being evaded. “This equates to around six and 12 percent of global consumption, which deprives governments of between US$20 [billion] and US$40 billion a year in taxes,” the statement reads.

TISA, which is a regional body that represents tobacco traders, growers and processors, estimates illicit tobacco trade incidences in Zambia being between 20 and 30 percent. South Africa is rated among the top five countries globally when it comes to the trade in illegal cigarettes, with industry research estimating that around 23 percent of all cigarettes consumed in South Africa in 2014 were illegal. Commenting on the issue, British American Tobacco Zambia managing director Clara Mlambo cited weak penalties for criminals, poor border controls, low arrest rates and tobacco taxes creating intra-regional disparities as contributing factors.

Two Zimbabweans appear in Namibian court over cigarette smuggling

Namibian police inspect over 1,000 boxes of impounded cigarettes at a roadblock in Rundu [Coastweek]

Namibian police inspect over 1,000 boxes of impounded cigarettes at a roadblock in Rundu [Coastweek]

Two suspects have appeared in a Namibian regional court Monday in connection with more than 1,000 cartons of cigarettes confiscated by the police Thursday last week.The two, both said to be Zimbabweans, appeared before a Rundu Magistrate in the northern Kavango region after their arrest over the 11.3 million Namibian dollars (940,000 U.S. dollars) cigarette contraband destined for South Africa.

The two were each charged with two counts of contravening the Custom and Excise Act 20 of 1998 and non-declaration of goods upon entering Namibia as well as the Prevention of Organized Crime Act 29 of 2004 of money laundering.

The accused persons were not asked to plead and their case was then postponed to July 8 for further police investigation. Acting on a tip-off, customs officials and the police raided two trucks en-route to South Africa and discovered 1,130 boxes that were hidden in fuel tankers. Source: http://www.spyghana.com/

Tobacco Taxes or Cigarette Smuggling – Which Is Worse?

Cigarettes+XXX+smokingRampant cigarette smuggling isn’t the problem in New York–“sky-high” tobacco taxes are, according to an op-ed by Patrick M. Gleason, director of state affairs at Americans for Tax Reform, in The Wall Street Journal.

Gleason’s opinion piece, titled “A Laffer Curve for Smokes,” digested here, takes the city and state of New York to task for their $180-million lawsuit against UPS over what officials allege was unlawful delivery of nearly 700,000 cartons of cigarettes. (A Laffer curve, named for economist Arthur Laffer, shows the relationship between rates of taxation and levels of government revenue.)

“This misguided lawsuit demonstrates once again that too many in government do not understand the root cause of cigarette smuggling. New York state levies the highest cigarette tax in the nation, $4.35 per pack, and New York City tacks on an additional $1.50 local tax. All told, the cost of one pack there can run to $12 or more.

“The result? Most of the cigarettes smoked in New York, 58%, are smuggled in from out of state, according to the nonpartisan Tax Foundation. The higher that revenue-hungry politicians raise tobacco taxes, the more profit smugglers can make.

“Politicians never learn. Of the 32 state tobacco tax increases that went into effect between 2009 and 2013, only three met or exceeded revenue projections, according to industry data.

“Lawmakers can claim they’re raising taxes on cigarettes to reduce smoking and improve public health. That talking point is belied by the recent imposition of taxes on electronic cigarettes, which are saving lives by delivering nicotine in puffs of water vapor instead of chemical-filled smoke. There are more than 15 tax bills pending across the country for currently untaxed e-cigarettes. Hawaii is proposing a tax of 80%, New York of 75%, Oregon of 65% and Ohio of 60%.

“For politicians, cigarette taxes are—and have always been—about one thing: money.

“New York state officials claim that the cigarette smuggling via UPS cost the treasury $29.7 million in lost tax revenue. That’s less than 0.03% of the state budget. The $4.7 million allegedly lost by New York City represents less than 0.006% of its budget.

“For a mere rounding error, state and city officials want to grab $180 million from UPS. That’s $180 million UPS could use to hire new workers, give employees raises, or invest back into its business. The leaders of New York and New York City should drop this silly lawsuit and find a more productive use of their time.”

Click here to view the full Wall Street Journal opinion piece.

Its Annual Budget time – Tobacco, Tax and the Black Market

Cigarettes+XXX+smokingThe nation awaits the 2015 Budget Speech with trepidation to know if income taxes will rise. But there is unanimous certainty there will, as per usual, be an increase in ‘Specific Excise Duties’. The only question is by how much? Taxation of cigarettes and tobacco products appears to be the path of least resistance for tax-collectors. It receives little backlash from the wider public (unlike e-tolls) and even support in some quarters.

The imposition of the so-called “sin taxes” on cigarettes and liquor products, in addition to generating significant fiscal revenues, does serve an economic purpose. Unlike normal goods and “necessity” products, cigarettes are not an essential good which people need to survive. As far back as the 1700s, Adam Smith averred “Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life … are therefore extremely proper subjects of taxation.” Again, the notion of the importance of tobacco to the fiscal basket is exemplified in utmost simplicity and honesty – if a politician, or an emperor in this case can be believed –

This vice brings in one hundred million francs in taxes every year. I will certainly forbid it at once – as soon as you can name a virtue that brings in as much revenue [Napoleon III (1800s) – reply when asked to ban smoking]

Despite all the furore over public health and governments efforts to decrease the demand for cigarettes, South Africa is no different to other nations – annual tobacco revenues to the state coffers amounts to around R10 Billion! Another round of sin tax increases in the upcoming budget appears inevitable, and these increases are spawning a range of unintended (but not unexpected) consequences – the illicit trade. Source: Polity.org / DNA Economics.

ZIM Police struggle to bust cigarette racket

CigarettesAn intricate web of smugglers, which reportedly involves manufacturers and middlemen, has been illegally carting cigarettes worth millions of dollars out of the country over the years, prejudicing the treasury of vital revenue.

Cigarette manufacturer, Savanna, has been fingered as one of the main culprits, while multinationals like BAT have also been mentioned in the illicit cross-border trade, mainly to South Africa.

Commonly smuggled brands include Remington Gold, Madison, Sevilles, Magazine Blue, Chelsea and Pacific Blue, manufactured by Savanna – which consistently denies smuggling.

A senior police sokesperson said “Even though we don’t always talk about it, we have managed to make significant arrests and the cases have been taken to court. The arrests include smuggling attempts at undesignated spots along the border and through official exit points such as Beitbridge”

A senior customs official told The Zimbabwean that cigarette smuggling, particularly through Beitbridge and Plumtree border posts, was difficult to arrest because of corruption.

“Policing at the border posts involves several agencies, namely the police, CIO (Central Intelligence Organisation), customs and special deployments from ZIMRA (Zimbabwe Revenue Authority). The problem is that these officers work in collaboration with the smugglers and haulage trucks and other containers carrying the cigarettes are cleared without proper checking. Hefty bribes are involved and the money is too tempting to resist,” said the customs official.

“You would be amazed how wealthy these officers have become. They have bought houses, luxury cars and send their children to expensive schools – yet their regular salaries are so low,” he added.

Immigration and customs officials, who also constantly liaise with their South African and Botswana counterparts and meet physically regularly, pretend to be checking the containers but clear them without completing the task, and know what the trucks and other carriers would be ferrying.

ZIMRA has four scanners for detecting contraband and an anti-smuggling team that also uses sniffer dogs, in addition to guard soldiers posted between the Zimbabwean and South African borders.

There are about 15 regular roadblocks along the Harare-Beitbridge road and 10 between Bulawayo and Plumtree that search trucks, buses and private cars. Despite this, the smuggling continues because of the collusion among the officials, said the source.

In early January, the Ferret team, a joint operation involving Zimbabwean and South African officers, intercepted a truckload of 790 Remington Gold cigarettes worth an estimated $119,000 destined for South Africa along the Masvingo-Beitbridge road. The smugglers were caught and arrested while offloading the cartons into small trucks. Source: The Zimbabwean

Greece – Contraband Cigarettes found aboard Abandoned Ship

The MV Amaranthus moored on the west coast of Zakynthos. [Photo: Hellenic Coast Guard]

The MV Amaranthus moored on the west coast of Zakynthos. [Photo: Hellenic Coast Guard]

Authorities in Greece are trying to piece together the source of a large quantity of smuggled cigarettes found onboard an abandoned ship at the Greek island of Zakynthos.

The Hellenic Coast Guard reports that the local Port Authority found a large amount of contraband cigarettes in the cargo hold of the Palau-flagged MV Amaranthus while moored along the west coast of Ionian Sea island. No crew were onboard the ship at the time.

The ship is scheduled to be taken to the port of Zakynthos where the cigarettes will be confiscated by Border and Customs officials as investigators try to determine the owner of the ship and source of cigarettes.

The initial inspection of the ship was part of crackdown on organized crime particularly targeted towards cigarette smuggling. Source: GCaptain.com

Irish Customs seize 50 million illegal cigarettes in 10 months

Revenue officials unload the Shingle at Dublin Port after 32 million cigarettes were seized [Picture: Irish Mirror]

Revenue officials unload the Shingle at Dublin Port after 32 million cigarettes were seized [Picture: Irish Mirror]

Customs officers have scored a major victory in the battle against smugglers after seizing 50 million cigarettes in 10 months.

The Irish Mirror reports Revenue officers made 5,025 separate swoops between January and the end of October.

They also impounded 9,560kgs of tobacco in 867 operations.

The record haul makes 2014 one of the most successful to date in the war on counterfeit tobacco.

While these smuggled cigarettes would have cost the Exchequer tens of millions of euro they’re also more dangerous for smokers’ health.

And with the huge crackdown, Customs officers will be keeping up the pressure in 2015 to stub out the tobacco black market.

A Revenue spokeswoman told the Irish Mirror: “To the end of October, more than 50 million cigarettes were seized in 5,025 separate seizures while 9,560 kilogrammes of tobacco were seized in 867 seizures.

“This includes a major seizure in Drogheda in June in which officers, supported by An Garda Siochana, seized more than 32 million cigarettes and 4,500kg of water pipe tobacco.

“Combatting the illegal tobacco trade is, and will continue to be, a high priority for Revenue.

“Our work against this illegal activity includes a range of measures designed to identify and target those engaged in the supply or sale of illicit products, with a view to seizing them and prosecuting those responsible.”

Customs officials use tactics including risk analysis, profiling, intelligence and screening of cargo, vehicles, baggage and postal packages.

They also carry out random checks at retail outlets, markets and commercial shops.

The spokeswoman said: “This includes analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU and international basis.

“It also includes use of analytics and detection technologies and ensures optimum deployment of resources at points of importation.

“Revenue co-operates extensively with An Garda Siochana in combating the illicit trade, and relevant agencies in the State also work closely with their counterparts in the North, through a cross-border group on tobacco enforcement, to target organised crime groups responsible for a large proportion of the illegal tobacco market.

“In addition, cooperation takes place with other revenue administrations and with the European Anti-Fraud Office, OLAF, in the on-going programmes at international level.”

Last week, Last week, routine profiling helped customs officers seize 600,000 cigarettes at Dublin Port with a retail value of €304,000. Source: Irish Mirror

South Africa leads the Continent in Illicit Cigarette Trade

illicit cigarettesSouth Africa leads Africa in the illicit trade in tobacco and is listed among the top five illicit markets globally, according to the Tobacco Institute of Southern Africa, which represents tobacco growers, leaf merchants, processors, manufacturers, importers and exporters of tobacco products in SA.

More than R20bn in tax revenue has been lost in SA since 2010 due to the illicit trade in tobacco, the institute’s CEO, Francois van der Merwe, said on Wednesday. The problem is severe in SA, but Zambia, Namibia and Swaziland have estimated incidences of well above the global average of between 10% and 12%.

Mr van der Merwe said efforts to combat the illicit trade in tobacco were complicated by the links that the business had with transnational organised crime syndicates, some of which funded terrorism.

“The problem runs far deeper than enormous losses of fiscal income that could have been put to good use to bolster government efforts in education, infrastructure development and poverty alleviation,” said Mr van der Merwe.

He was speaking ahead of a meeting later in November of global, regional and local law enforcement, along with revenue and customs agencies in Cape Town, who will seek better ways to collaborate in addressing the illicit tobacco trade in sub-Saharan Africa.

“We have seen first hand what effective focus on combating illicit trade by government can achieve,” said Mr van der Merwe, ascribing a decrease in the illicit tobacco trade, from 31% to 23% this year, to better collaboration.

“This is in the most part due to the excellent efforts by the various law enforcement, customs and revenue, Treasury and defence departments in the South African government.”

Mr Van der Merwe said that although the declining numbers in SA were encouraging, this did not bode well for the rest of the region as organised crime was a moving target prone to shifting its focus to “easier” markets when it was under attack.

He claimed that those who traded in illicit products, whether cigarettes, alcohol, textiles or DVDs, or committed environmental crimes such as rhino poaching or abalone smuggling were most often also involved in other serious crimes and even the funding of terrorism and money laundering. Source: BDLive.co.za

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