Illegal product reaches 57% of the cigarette market

A survey by Ibope Inteligência revealed that the illegal cigarette market continues to gain space in Brazil, driven by the lower price compared to the legal product. The consequence is an increase in consumption and a reduction in tax collection. The study also showed that illegal brands already occupy five of the top ten positions in the best-selling ranking, including leadership. Smuggling from Paraguay is the main source of the product sold illegally in the Brazilian market.

The quantitative survey, of national scope, was carried out with smokers aged 18 to 64 years living in municipalities with more than 20 thousand inhabitants, of all social classes, totaling 8.428 people, from January to April this year. According to the study, in the last year, 110,7 billion cigarettes were consumed in the country, an increase of 3% in relation to 2018. This number reflects the advance of the illegal product, which grew so much in absolute numbers (from 57,8, 63,4 billion to 54 billion units) and market share (from 57% to 49%). The illegal market consists of smuggling (8%) and cigarettes made in Brazil in a clandestine manner (48,4%). In the same period, consumption of legal cigarettes fell from 47,3 billion to XNUMX billion units.

Ibope conducts this survey annually since 2014. In the first edition, the illicit product held 40% of the market, an index that has been growing every year. Based on the trend curve verified in the historical series, the institute estimates that, if no concrete measures are taken to change this situation, illegal cigarettes will reach 62% of the market in 2020.

In addition to not undergoing health surveillance, exposing smokers to unknown risks, the smuggled product causes enormous damage to public coffers. Calculation based on the Ibope survey shows that, this year, tax evasion will reach R $ 12,2 billion, above the sector's tax collection, estimated at R $ 11,8 billion. In order to have an idea of ​​what this value represents, it would be possible to create 21 thousand Basic Health Units, 5,9 thousand Emergency Units or 8,6 thousand daycare centers.

The study also follows the evolution of the price of illegal cigarettes, which costs, on average, R $ 3,44, which represents less than half the value of legal cigarettes. The reason lies in the difference between the tax burden of cigarettes in Paraguay, 18%, and in Brazil, 71%, on average. In addition, contraband violates the minimum price required by Brazilian law, of R $ 5 per pack.

With these illicit advantages, Paraguayan brands continue to increase their participation in the national market. This is the case of Eight, the most sold in Brazil, which today dominates 16% of consumption. A year ago, it had 15%. Both this and the Gift brands (3rd in the ranking) and San Marino (6th) are manufactured by Tabacalera del Este, which belongs to the former president of Paraguay Horacio Cartes. The list of smuggled products also includes Classic (8th) and Fox (9th). Together, these five brands account for 37% of the Brazilian market. The five best positioned Brazilians hold 31%.

The current president of Paraguay, Mario Adbo Benítez, who replaced Cartes in August 2018, tried this year to raise the product tax to 40%, but was defeated in the Senate by 28 votes to 13. ETCO's executive president, Edson Vismona, regretted the decision. “Paraguay acts in a conflicting way when it comes to combating cigarette smuggling. On the one hand, the government of President Benítez indicates that it may come to ratify the Protocol for the Elimination of the Illicit Trade in Tobacco, an important instrument for combating cigarette smuggling worldwide. But, on the other hand, the parliament refuses to adopt one of the main premises of the document, the increase in taxes on the product ”, he said.

 

 

ETCO creates project to raise awareness and engage Brazilians against illegal acts

 

Brazil lost R $ 193 billion to the illegal market only in 2018. In this account, in addition to smuggled products, there are also various forms of corruption, counterfeiting and other deviations. We cannot allow our country to be taken over by illegality. So we created the project #In the law, to raise awareness and engage Brazilians in the fight against any illegal act. Understand better in our manifest published in the newspaper Gazeta do Povo.

ALAC Coordinates efforts in favor of legality

 

Edson Vismona, president of ETCO and pro-tempore president of the Latin American Anti-Smuggling Alliance (ALAC), said today (7/05), that the organization that directs and integrates business chambers and government representatives, seeks to increase the increase in participation and commitment Latin American countries in the fight against smuggling.

During the V ALAC Meeting, which takes place between 7 and 8/05 in Costa Rica, Vismona, also said that “we are increasing the awareness of people and governments about the importance of cooperation and integration between countries to fight crime organized, which uses contraband resources for other illicit activities, clearly threatening public security ”.

According to data released during the ALAC, smuggling moves resources equivalent to 2% of Latin America's GDP, or about US $ 210,000 billion annually, affecting industries such as steel (metal-mechanics and steel), tobacco, hot drinks, medicines, cosmetics, plastics, footwear, textiles and cybersecurity.

This crime provides products smuggled to the markets, without regulations or controls, harming not only consumers but also governments.

According to Vismona, Central America must intensify joint efforts to eradicate smuggling, as Brazil, Paraguay, Chile and Argentina do.

"We hope to succeed in Central America in expanding integration between governments," he concluded.

Maria Carolina Uribe, president of the National Association of Industry of Colombia (ANDI), one of the co-organizers of the meeting, responsible for structuring a regional agenda to combat smuggling:

“Here in Costa Rica, we intend to unite the entire region around the problem of smuggling, working around the fundamental elements of illicit trade to combat it. When we started ALAC our focus was on the customs issue, then we moved to a judicialization and dismantling of criminal structures approach, “said Uribe.

In recent years, ALAC has worked on building a regional public-private agenda and sharing good practices.

The most smuggled product in the region is cigarettes, according to data from the organization.

The most recent study of illicit cigarette trade launched in 2017 by the Observatory on Illicit Trade of the National Chamber of Commerce and British American Tobacco Chile, shows the consumption rates of this illegal product and its main consequences, among them the exponential growth of “preference ”By the illegal product among consumers and a consequent loss due to tax evasion that reaches US $ 500 million per year.

In Argentina, contraband cigarettes generated, in 2017, an estimated loss of approximately 8.500 billion pesos in tax collection.

Forum in Asunción debates security, smuggling and terrorism in the Southern Cone

In the week of January 14, Paraguay hosted the 13th Parliamentary Forum on Intelligence and Security. Created in 2014 by the then US deputy Robert Pittenger, the forum was attended by experts and authorities from different countries and aimed to discuss issues related to intelligence policy and threats to international security.

Edson Vismona, president of the Brazilian Institute of Ethics in Competition (ETCO), highlighted the importance of the initiative of the new Paraguayan government in hosting the event for the first time. "Paraguay has shown enormous interest in discussing ways to combat the various forms of illegality that currently prevail in the Triple Border Region" he says.

He also said that "due to the presentations of several countries, including Brazil, without cooperation, integration and coordination between countries, it will not be effective to combat transnational criminal and terrorist organizations and money laundering that threaten the public security of all". Vismona stressed that these criminal groups are currently also financed through the illegal market, in particular cigarette smuggling. "In Brazil, for example, smuggled cigarettes from Paraguay already dominate 54% of the entire national market, and this trade is controlled by gangs across the country."

Robert Pittenger spoke during the opening of the event and stated that "The Triple Border is one of the most critical areas in the world, and for a long time we have allowed drug cartels and terrorist organizations to build and expand their operations in South America". He said that this can no longer be tolerated and that the United States has high expectations for the future of the region.

Among the Paraguayan authorities who participated in the Forum were the Minister of Finance, Benigno López; José Cantero Sienra, president of the Central Bank of Paraguay; Julio Ullón Brizuela, chief minister of the Civil Cabinet; María Epifania González, minister of the Secretariat for the Prevention of Money Laundering; and Arnaldo Giuzzio, head of the National Anti-Drug Secretariat, in addition to Argentine lawyer Juan Marteau, a specialist in financial crimes and international money laundering.

 

New Law that removes CNH from drivers is fundamental to fight smuggling

On January 10, President Jair Bolsonaro signed Law 13.804, which foresees the revocation of the National Driver's License (CNH) of drivers caught transporting products resulting from smuggling and embezzlement. The bill authored by federal deputy Efraim Filho (DEM / PB) had been presented in 2015 and was approved by the congress at the end of 2018.

For the president of the Brazilian Institute of Ethics in Competition (ETCO), Edson Vismona, this is an important tool for combating organized crime and illegality in Brazil: “the criminal gangs that now dominate these activities in the country have created a highly logistical chain professional, which distributes illegal products throughout the national territory, mainly by highways. “Vismona believes that the new law will be a disincentive for those who depend on CNH for their livelihood. “We hope that the new Law will 'take' and be as efficient as the Prohibition has been, bringing benefits to the whole society. We always need to reduce the scope for criminal action and this important measure follows in this direction ”

The new law provides that drivers who carry smuggled or stolen cargo lose CNH after a final court decision. But deputy Efraim Filho, author of the law, explains that the punishment may come even earlier: “the new Law provides that the driver who carries smuggled or stolen cargo will lose the CNH after a final court decision. But he explains that the punishment may come even earlier: "With the new law, the police authorities have an important instrument in hand that allows them to immediately request the suspension or even the impeachment of the license of drivers caught in the act of carrying contraband." Efraim also believes that drivers will think twice before joining the crime. "Before the law, such drivers were often not even arrested and, the next day, they were already on the roads committing new crimes," says the deputy.

Smuggling in Brazil

In 2018, smuggling brought losses of R $ 146 billion to Brazil. Cigarette leads the most smuggled products, and ended the year breaking another record, with 54% of the total market. For the first time, the collection of taxes on the sector (R $ 11,4 billion) was less than the evasion generated by illegality (R $ 11,5 billion).

Access the new edition of ETCO Magazine here

Check out the new edition (Dec / 2018) of ETCO Magazine, which features as a cover story, the 10 measures to combat the illegal market, in addition to coverage of events and research conducted by ETCO. Read also the unprecedented interview with the president of the advisory council, Everardo Maciel.

Survey shows 10 measures to combat the illegal market that supports organized crime
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