Stronger policies to light fire under illicit tobacco trade

21:47 | 18/07/2020
Proper policies would prevent tobacco smuggling, increasing contributions to the state budget and providing better products to smokers.
stronger policies to light fire under illicit tobacco trade
Need proper policies for tobacco business

Despite the extensive efforts and measures to prevent cigarette smuggling, these activities remain rampant, especially in locations like Long An, Can Tho, Dong Thap, Tay Ninh, Kien Giang, An Giang, Binh Phuoc, Ho Chi Minh City, and Quang Tri.

As many as around 400,000-500,000 packs of cigarettes are smuggled into the country every day through border provinces. This causes a loss of around VND8.5 trillion ($369.57 million) to the state budget, with $500 million leaving the economy through this channel every year.

At yesterday's (July 17) workshop on the prevention of cigarette smuggling, Nguyen Manh Hung, chairman of Vietnam Consumers Protection Associationsaid that smuggling cigarettes, which takes place on both maritime and road ways, is hugely profitable (second only to drugs) with a margin of up to 400 per cent, as legally sold cigarettes are subject to 100-202.5 per cent import tax, 10 per cent value-added tax, and 2 per cent contribution to the fund for preventing and controlling tobacco-related harms.

These high taxes along with the country's topography – with long borderlines to numerous countries –are very conducive to cigarette smuggling.

Sharing this opinion, Rodney Van Dooren, head of ITP for Philip Morris International (PMI) for the Asia-Pacific, said that illicit trade is an international phenomenon that knows no borders. Illicit trade in tobacco is a clear and direct funding source for terrorism and organised crime, as well as facilitates crimes in local communities, disrupts civil society, and fosters corruption.

Through smuggling, counterfeiting, and tax evasion, governments are losing billions of dollars in tax revenue, legitimate businesses are being undermined, and consumers are being exposed to poorly-made and unregulated products.

According to the Organization for Economic Co-operation and Development (OECD), the volume of international trade in counterfeit and pirated products could amount to as much as $509 billion. This represents up to 3.3 per cent of world trade. A recent report by the Munich Security Conference highlighted that illicit flows resulting from cross-border criminal operations – such as the smuggling of arms, tobacco, or pharmaceuticals – are estimated between $1.6 and $2.2 trillion annually.

According to the World Health Organization and the World Bank, illicit trade in tobacco makes up 10-12 per cent of global tobacco consumption, with an estimated volume of up to 600 billion illicit cigarettes. Cigarettes are among the most illegally trafficked goods in the world. Criminals are increasingly attracted to the high profits and minimal risks associated with trafficking illicit cigarettes.

"At PMI, we believe that we have a responsibility to address the illicit trade problem and help foster an inclusive approach for public and private sectors to build innovative programmes against illicit trade in its many forms. This is why in 2016 we decided to launch PMI IMPACT, a global initiative supporting public, private, and NGO projects aimed at tackling illicit trade and related crimes, such as corruption, money laundering, and organised crime – an initiative that PMI allocated $100 million for," Dooren said.

Meanwhile, Nguyen Triet, general secretary of the Vietnam Tobacco Association proposed market surveillance authorities to strengthen reviewing and checking the market to prevent illicit tobacco trade. He also recommended amending the Law on Prevention and Control of Tobacco Harms that moves the Funds for Prevention and Control of Tobacco Harms under the management of the Ministry of Finance, as well as proposed this ministry not to raise special consumption tax in the next years.

By Nguyen Huong

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