Deadly trade

Deadly trade

Gangsters using profits from illegally imported cigarettes to buy guns, ammo, say police

BY KARENA BENNETT Observer business reporter

Wednesday, November 30, 2016

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The country is losing close to $2 billion in revenue annually from the trade in illegally imported cigarettes by criminals who, the police say, are using the proceeds to purchase guns and ammunition.

According to Assistant Commissioner of Police Clifford Chambers, who heads the Counter Terrorism and Organised Crime Investigation Branch, the gangsters are also intimidating some retailers and are working in partnership with others to ensure sales.

Chambers made the disclosure yesterday at a press briefing called by local cigarette distributor Carreras at the company’s Ripon Road office in Kingston, saying that the criminal activities associated with the trade in illegally imported cigarettes is a new trend that the police are seeing.

"It is a little more complicated than just this distribution or sale, because the persons to whom these products are being offered, like shopkeepers and bar operators, somehow purchase these items out of fear," he said.

"But the network goes wide. The persons who are selling and dealing in these items are at the lower level. In the middle you have the high-tier operatives who are associated with higher persons," he explained.

Managing director of Carreras Limited Marcus Steele, in highlighting the potential revenue losses to the Government, said there have been a three per cent increase in the inflow of illegal and cigarettes since the start of the year, reaching almost 20 per cent of the total local consumption.

Steele named three brands that he said are illegally imported and which account for a total of $800 million in revenue losses to the Government.

He also said that people involved in the illegal cigarette trade usually intensify their efforts to lure unsuspecting retailers to purchase and sell the illegal brands during the Christmas season.

"This is very disheartening," Steele said. "When you look at where we are finding these brands, they are right across the island, and it is very frustrating for the legal cigarette operators because we have to abide by the regulations and pay our taxes."

He said the frequent and excessive excise increase was one of the main contributors to the influx of illegal cigarettes on the local market, and argued that the repeated hike in prices has pushed consumers to seek cheaper alternatives.

"The Government stipulates that a stick of cigarette is sold for $45, but these brands are being sold for $25," Steele said.

Currently, total tax levied on cigarettes is 47 per cent and the Government is bullish on increasing the rates in accordance with stipulations of the World Health Organisation. The most recent increase on cigarettes was placed on the special consumption tax, moving it from $12 per stick to $14 per stick to fund the Government’s promised $1.5-million tax break. The increase is expected to rake in $574 million for the fiscal year.

Yesterday, Steele urged consumers to play their part in the fight against the illicit trade by ensuring that they only purchase cigarettes with graphic health warnings on the front and back panels of each pack, as required by the Public Health Tobacco Control Regulation 2013.

The text in the graphic health warning must also be written in English and the statement ‘sale only allowed in Jamaica’ must be on the side panel of each pack.

Consumers found in possession of illegal cigarettes may be fined up to $1 million, but Steele wants stiffener penalties, like imprisonment, to be imposed.

"We need to look back at those fines, because I don’t believe that they are actually a deterrent. We need to continue to protect the revenue of Government, as well as protect our customers and consumers," he said.

Efforts to stem the influx of illegally imported cigarettes are now under way through the Counter Terrorism and Organised Crime Investigation Branch of the Jamaica Constabulary Force, which is also working with other local authorities to increase border protection, port monitoring and enforcement.

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