Cigarette Smuggling


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  1. Black Market: Cigarette Smuggling $50 Billion

News, information and statistics about the illicit tobacco trade. Cigarette smuggling on the black market and other facts collected from tobacco companies, security agencies and other public information sources.

According to figures released by an official with the Bureau of Alcohol, Tobacco, Firearms and Explosives, a cigarette smuggler can make up to $500,000 from from smuggling cigarettes between states on the East Coast.

The smuggler legitimately buys 200 cases of cigarettes in southern states such as North Carolina or South Carolina. Then, the smuggler would then drive up the coast to New York City, where the tax on tobacco is $4.35.

56.9 percent of the cigarettes smoked in NYC in 2012 were smuggled though the black market.

(See more profits from illegal jobs.)

Source:  Mark Niquette and Esme E. Deprez, “Cigarette Smuggling Prompts Crackdown by States Losing Billions,” Bloomberg Businessweek, March 24, 2014.

According to the Tax Foundation and data from the Mackinac Center for Public Policy, smuggled cigarettes account for 56.9 percent of all  cigarettes smoked in New York City. The smuggled cigarettes were smuggled into the state from other states where the tobacco tax is lower.

According to CBS news, the cigarette tax in New York City is $4.35 per pack. In states such as Missouri, North Carolina and Virginia, the tax on tobacco is less than $1 per pack.

Officials from the American Lung Association dispute these figures by stating that the Mackinac Center for Public Policy receives funding from tobacco companies. The American Lung Association states that smuggling is a lot smaller than what the report claims.

Source:  Jonathan Berr, “The boom in smuggling to avoid cigarette taxes,” CBS News, March 21, 2014.

According to data collected by RTI International, nearly 40 percent of the cigarettes smoked in Boston, Massachusetts were smuggled in to the state through the black market and did not pay the state excise tax. Statewide, the Department of Revenue estimates that 8 to 27 percent of all cigarettes smoked in the state were smuggled. Based on those estimates, the state loses between $60 Million to $250 Million a year in taxes due to cigarette smuggling.

The average price of a cigarette pack in Massachusetts is $9.60, with roughly half of the cost due to state taxes. The state collects $660 Million a year from tobacco sales.

64 percent of the black market cigarettes sold in Boston were traced back to Pennsylvania, where the tobacco tax per pack is $1.60. Smugglers purchases cartons of cigarettes and simply drive to Boston where the packs are sold on the black market.

Source:  Kevin Hartnett, “Boston’s black-market cigarette problem,” Boston Globe, February 2, 2014.

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Customs and Excise officials seized over 38 million cigarettes that were being smuggled into Hong Kong. The number of contraband cigarettes seized was 11 million higher than the number of cigarettes that were seized in 2012, an increase of 41 percent.

(All contraband cigarettes statistics.)

Despite the seizures, security officials estimate that up to 1.8 billion cigarettes are smoked in Hong Kong each year that was purchased on the black market, or one in three cigarettes smoked.

The cost or a single pack of tobacco bought at a retail store in Hong Kong is $6.45 (5 Hong Kong Dollars). When buying packs off the black market, a customer can buy 10 packs for $38 (300 Hong Kong Dollars), or $3.80 per pack.

(China security threats and economic risks.)

Source:  Jennifer Ngo, “Illegal cigarette trade booming despite customs busts,” South China Morning Post, January 4, 2014.

In the first ten months of 2013, authorities in Ireland seized 929 liters of counterfeit alcohol across the country. In 2012, the number of fake alcohol bottles  that were seized total 232. Vodka was reported to be the most counterfeited bottle in 2013.

Criminal justice programs state that counterfeiters use legitimate alcohol bottles when making counterfeits. The real bottles are taken from recycling centers or directer from bars and pubs. The bottles are then filled with raw alcohol and then diluted with water to achieve a 37.5 to 40 percent alcohol by volume.

Although bootleg alcohol seizures increased in 2013, the number of cigarette packs seized from the black market decreased in Ireland. In 2012, a total of 95 million cigarettes were seized across Ireland. In 2013, the number of smuggled cigarettes seized decreased to 37.7 million.

Source:  Kitty Holland, “Bootleg alcohol seizures rise dramatically,” Irish Times, December 28, 2013.

According to the Tax and Customs Authority in Hungary, security authorities seized 68 million cigarettes that were being sold on the black market. In the first 10 months of 2013, the number of cigarettes seized increased to 85 million.

The price of a pack of cigarettes in Hungary has increase in recent years. In 2011, the price for a pack was $2.76 (600 Hungarian Forints). In 2013, the average price increased to $4.61 (1,000 Forints.)

Source:  AFP, “Hungary turns to black market for a smoke,” Google News, December 24, 2013.

22 percent of the alcohol sold in Costa Rica is sold illegally without the payment of taxes, according to the Finance Ministry. Over 90 percent of the contraband alcohol is smuggled into the country.

Financial authorities also seized 12.3 million black market cigarettes that were being smuggled without the payment of duties in the first 10 months of 2013. The amount of illegal tobacco seized was 5 times higher than the 2.3 million black market cigarettes that were seized in all of 2012.

Source:  Zach Dyer, “Bootleggers make bank with black-market booze, cigarettes,” Tico Times, December 18, 2013.

The Vietnam Tobacco Association states that over 100 different brands of cigarettes are smuggled into Vietnam each year. The brands Jet and Hero are the most popular, with the two brands consisting of over 90 percent of the smuggled tobacco in the country.

Roughly 20 percent of the country’s tobacco market is smuggled cigarettes. Most of the black market tobacco are smuggled into the country from China, Laos, Malaysia and the Philippines.

Source:  “Vietnam Prepares For Rise In Cigarette Smuggling As New Year Festival Looms,” Bernama, November 13, 2013

According to a study conducted by KPMG, 1,433 tonnes of illegal tobacco was smuggled into Australia in 2013, an increase of 154 percent from the previous year.

13.3 percent of all tobacco sales in Australia were of black market cigarettes.

With taxes and fees included, people in Australia pay nearly $20 Australian dollars for a pack of cigarettes. In the South East Asia region, where many of the cigarettes are smuggled from, the packs of tobacco can cost as low as $1.08 AUD.

It was previously reported that the Australian Government losses up to $2.1 Billion a year due to cigarette smuggling.

Source:  Alan Howe, “Illicit tobacco funding gangs and increasing use,” News.Com.Au, November 3, 2013.

Australia’s government lost up to $1.1 Billion in tobacco tax revenue in 2012 due to cigarette smuggling activities.

Security agencies in Australia 82 million black market cigarettes in 2011. In 2012, the number of illicit cigarettes increased to 122 million.

2.7 billion cigarettes were smoked in the country in 2012 that were purchased without the payment of taxes, or 11.3 percent of all cigarettes smoked. Most of the contraband cigarettes were either smuggled into Australia from China or South Korea or produced in homegrown tobacco shops.

Source:  Lily Kuo, “Australia lost $1.1 billion because of illegal cigarettes last year,” Quartz, October 2, 2013.