Cigarette Smuggling

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  1. Cigarette Smuggling $50 Billion

Cigarette Smuggling

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.

A study by Oxford Economics and the International Tax and Investment Center found that the Philippines Government lost $357 Million (15.6 Billion Philippine Peso) in tax revenue due to the sale of illegal cigarettes.

17.1 Billion cigarettes that were sold on the black market were smoked in the Philippines in 2013, up from the 6.1 billion illegal cigarettes smoked in 2012. 1.8 billion counterfeit cigarettes were smoked in the Philippines in 2013 as well.

(All cigarette smuggling statistics.)

Source:  Jon Carlos Rodriquez, “Philippines lost nearly P16-B on illegal cigarette sales in 2013 – study,” ABS CBN News, June 5, 2014.

Security officials and tax analysts state that about $9.5 Billion in tax revenue was lost to the Government of Turkey due to cigarette smuggling on the black market.

In January 2010, the Turkish government raised the tobacco excise tax by 30 percent, thus creating a demand for tobacco on the black market.

Back in 2007, an estimated 3.9 billion cigarettes were bought on the black market. In 2013, an estimated 16.2 billion cigarettes were bought without taxes being paid.

Customs officers seized nearly $2 Billion worth of contraband tobacco in 2013.

Over a quarter of the population in Turkey is estimated to be smokers.

Source:  Tom Arnold, “Smoke and mirrors in Turkey with illicit cigarette trade,” National, May 10, 2014.

According to the International Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry, the sales of counterfeits and smuggling of fake goods into India caused sales losses of $11.9 Billion in 2012. This amount represented 21.7 percent of sales losses to companies.

Some of the consumer sectors that are impacted by counterfeits in India are the auto parts, alcohol, computer hardware, foods, mobile phone and tobacco industries.

(Counterfeit Goods Markets by Countries.)

Source: “2014 Special 301 Report,” Office of the United States Trade Representative, April 2014.

Security officers in Vietnam reported that its agencies investigated over 25,000 cases of counterfeit goods entering the country in the first 4 months of 2014.

According to officials, up to 80 percent of the counterfeit goods sold in Vietnam originates from China.

On average, enforcement agents with the Ministry of Industry and Trade investigate 90,000 cases of counterfeits being sold across Vietnam. Most of the cases involves counterfeit foods and beverages, fake tobacco products, and fake clothing.

Source: Bao Van, “Vietnam could become the next big counterfeiter,” Thanh Nien Daily, April 24, 2014.

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.

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.