Millions lost to trade in smuggled cigarettes

Cigarette smuggling cost the Government €556m in lost taxes and duty last year, it was revealed today.

Cigarette smuggling cost the Government €556m in lost taxes and duty last year, it was revealed today.

Retailers also wrote off €692m euro in lost sales due to the lucrative illegal trade, although nine shops are being investigated by customs officers for selling counterfeit brands.

A review by cigarette giant Japan Tobacco International (JTI) found customs seized 218.5 million cigarettes last year, valued at just over €92m.

Finance Minister Brian Lenihan said he did not increase excise on cigarettes in the December budget fearing the already high price – around €8.45 euro for a pack of 20 – could contribute further to the smuggling problem.

“Tobacco smuggling is a serious problem for Ireland. It deprives the state of the revenues from the sale of legitimate products, and is damaging to both the tobacco industry and the retail trade,” the minister said.

“The tobacco industry itself has a crucial contribution to make in dealing with the threats posed by smuggling.

“I did not increase the excise duty on tobacco products in my December Budget as I believe the high price is contributing to increased cigarette smuggling.”

JTI said the most common platforms for selling illegal cigarettes were unlicensed street markets and door-to-door sales, with even bread vans and a postman reported to be engaged in the trade in 2009.

But the study reveals an upsurge in the number of legitimate shops trading in counterfeit goods, with nine retailers being investigated by customs last year.

JTI said it is taking a zero tolerance approach to such behaviour and took the “unprecedented” decision to cease trading with a shop in the midlands believed to be selling counterfeit Benson & Hedges Gold Kingsize.

Cease and desist letters were also sent to three other shops thought to be dabbling in the trade.

JTI warned inadequate penalties, low fines, and unregulated street markets continued to make the illicit trade of tobacco a common choice for criminals in Ireland.

It said there was a growing link between the trade and hard-core criminality.

The study claimed a smuggled 40 foot container load of 7.5 million cigarettes can net a profit of €1.3m for gangs, yet the average fine was around €1,000 in 2009

Other key findings from the JTI review include:

:: 60% of all tobacco seized at sea or ports last year was counterfeit, with the remaining 40% contraband.

:: Of the total 218.5 million cigarettes seized, around a half were JTI brands, all counterfeit.

Martin Southgate, JTI Ireland’s general manager, said to tackle the trade revenue must be properly resourced to target smugglers while Government should avoid hiking excise duty.

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