Thursday 9 July, 2020

$1 BILLION UP IN SMOKE: Massive rise in illegal cigarette trade

Marcus Steele, the managing director of Carreras, addresses journalists at a press conference on Thursday. (PHOTOS: Marlon Reid)

Marcus Steele, the managing director of Carreras, addresses journalists at a press conference on Thursday. (PHOTOS: Marlon Reid)

Carreras Limited, the leading distributor of cigarettes and tobacco related products in Jamaica, on Thursday raised concern about the massive rise in the illicit cigarette trade across the island.

It warned that, if the underground operation continues to grow at its current rate, the government will lose up to $1 billion in revenues this fiscal year.

Marcus Steele, the managing director of Carreras, said the projected loss is in addition to losses already suffered on revenue derived from several forms of taxes - Special Consumption Tax, General Consumption Tax and Customs Administration Fee - on the items.

Steele in making the revelation cited several factors for the rapid growth of the illegal industry.

One of them he said was the frequent increase in taxes on cigarettes. This he explained was forcing many consumers to turn to the illegal brands, which were being sold by members of the criminal underworld at a cheaper rate.

"At this rate of decline, the company will be delivering over a billion dollars less in revenues to the Government, in comparison to 2016," the managing director told Loop Jamaica after a press conference held at the company’s head office in Kingston.

Carreras said a recent study showed that in the capital city, Kingston, which has the largest smoking population in the country, there was more than 25 per cent jump in smokers consuming illegal brands during the fiscal year.

“Before the $3 Special Consumption tax came in effect in March of this year, 25 per cent of the cigarettes consumed in the parish were found to be illegal, “Steele said.

Steele said after the increase in taxes on cigarettes, investigations by the company found that that the consumption of illegal cigarettes in the capital city jumped to 54 per cent.

In the parish of St Thomas, six per cent of the cigarettes consumed in the parish before the recent tax increase were illegal; that figure has jumped to 16 per cent, according to the company.

Officials from Carreras said this was something that the company had been warning against for years.

“For many years, Carreras has warned of the direct link existing between frequent and excessive increases in tobacco excise and a rising illicit cigarette trade,“ the managing director said.

"This has been demonstrated by the decline in our volumes, which will consequently negatively impact the Government's projected revenues from the increased excise on tobacco," added Steele.

Meanwhile, the Counter Terrorism and Organized Crime Investigation Branch (CTOC) of the Jamaica Constabulary Force says it has gathered intelligence that will allow law enforcement officials to make a bigger clamp down on the multi-million dollar illicit cigarette trade.

"We have been holding a series of meetings with officials from Carreras and from those consultations have gathered information that will allow law enforcement officers to better identify several of the illegal brands being sold on the local market," Anthony McLaughlin, Superintendent at CTOC told Loop Jamaica.

He said, with this knowledge, CTOC would be sensitizing other members of the Constabulary on what to look for when searching for the illegal cigarettes.

Police said funds raised in the illicit cigarette trade is being used to fund the operation of criminal networks across the island.

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