Brazil loses R $ 291,4 billion to the illegal market

Brazil lost R $ 291,4 billion reais to the illegal market in 2019, according to a survey that has been carried out since 2014 by the National Forum Against Piracy and Illegality (FNCP). The value is the sum of the losses recorded by 15 industrial sectors and the estimate of taxes that are no longer collected due to this illegality.

The amount increases much more than the national Gross Domestic Product (GDP). While Brazil's GDP increased by 2019% in 1,1, the illegality market is growing. The loss of the sectors was R $ 199,6 billion, which added to an average of the tax evasion (R $ 91,8 billion) reached R $ 291,4 billion. This average was made with the percentage of 46%, but there are products, such as cigarettes, where the tax can reach 90%.

An estimate by the Latin American Smuggling Alliance (ALAC) also points out that, on average, the illegal market corresponds to 2% of the GDP of Latin American countries. In Brazil, this percentage is at least 7.85%. “The GDP does not grow significantly, it is stabilized, but illegality is increasing more and more”, says Edson Vismona, president of the FNCP.

For the entity, this annual survey is very important for the productive sectors, which thus demonstrate the billion dollar losses to the illegal market. “This action attests that the illegal economy is growing, the damage only increases and it is important to alert society and public authorities to the extent of this gap, emphasizing the need for coordinated and permanent actions to combat illegality, both in the physical and digital markets. , which erodes our development and makes it difficult to attract investments and generate jobs ”, says Vismona.

57% of cigarettes in Brazil are illegal

Cigarettes, the sector most affected by contraband, for example, lost R $ 15,9 billion last year. In 2018, it was R $ 14,4 billion. According to Ibope data, 57% of cigarettes sold in the country are illegal. The latest survey conducted by the institute showed growth in the illegal tobacco market for the sixth consecutive year: of the 57% illegal, 49% were smuggled (mainly from Paraguay). As a result, 63,4 billion criminal cigarettes flooded Brazilian cities - it is known that this product is used to finance militias and drug trafficking.

A study by Oxford Economics also found that the operations of legitimate cigarette manufacturers support 25,9 jobs in Brazil. The illegal cigarette market has stopped the tobacco industry from generating 27 jobs.

Another example of the expression of illegality is seen in the fuel sector, which reached the amount of R $ 23 billion. According to Vismona, this significant value occurred because the segment improved the data. "They added, in addition to losses due to fraud, also theft and fuel diversion in the pipelines", says the president of FNCP.

The FNCP survey has been carried out since 2014 and is based on data pointed out by the productive sectors themselves, which have their own metrics (research, market evaluation). The 15 segments covered by the FNCP study are clothing; glasses; cigarette; Cable TV; personal hygiene, perfumery and cosmetics; alcoholic beverages; fuels; audio-visual; pesticides; cell phones; imported perfumes; sports equipment; toys; software; and electronics (PCs, Servers, Networking, Printers / Toners / Ink Cartridges and Security Equipment).

Brazil loses R $ 193 billion to the illegal market

Survey by the National Forum Against Piracy and Illegality shows that the loss advanced 32% in relation to the previous year

A survey carried out by the National Forum Against Piracy and Illegality (FNCP) shows that, in 2018, Brazil recorded losses of R $ 193 billion to the illegal market. This value is the sum of the losses recorded by 13 industrial sectors and the estimate of taxes that are no longer collected due to this crime.

The value is 32% higher than that registered by the FNCP in 2017 (R $ 146 billion) and almost double the number in 2014.

For Edson Vismona, president of ETCO and FNCP, this data shows that the country continues to lose the war to organized crime. “In 2018, the sum of official spending on health and education was R $ 208 billion, almost the same amount that Brazil lost due to the crime-driven market. Brazilian society can no longer continue to live with this reality ”says Vismona.

He recalls that today the trade in illegal goods is dominated by criminal gangs: “These groups use the profits from this activity to finance other crimes such as drug and arms trafficking. Consumers need to be aware that when they buy smuggled or counterfeit goods, they are handing over money to factions that increase violence for cities across the country. ”

The heavy and chaotic Brazilian tax burden has a direct impact on the final price of products and encourages the demand for lower prices, even if it represents an ethical inconsistency: on the one hand the consumer calls for the fight against crime and corruption, on the other it finances these actions that criticizes so much.

Cigarettes, the main sector affected by smuggling, demonstrate this reality. Last year, 54% of all packs sold in the country were illegal, an increase of six percentage points over the previous year. Of this total, 49% were smuggled from Paraguay and 5% were produced by companies that operate irregularly in the country. The main stimulus for this growth is the huge tax difference between the two countries. Brazil charges an average of 71% of cigarette taxes, reaching up to 90% in some states, while in Paraguay the rates are only 18%, the lowest in Latin America. As a result, in 2018 the difference in price charged between Brazilian and Paraguayan cigarettes reached 128%.

The sectors analyzed by the FNCP are: clothing; cigarettes; glasses; Cable TV; personal hygiene, perfumery and cosmetics; fuels; audiovisual (films); pesticides; imported perfumes; sports equipment; toys; medicines and software.

Losses to the country - The amount of losses recorded in 2018 could be turned into benefits for the population and for the development of the Brazilian economy. With R $ 193 billion it would be possible to invest in the construction of: 1.520 hospitals, 30 thousand Emergency Care Units (UPAs), 96 thousand day care centers, 2 million popular houses, 7,7 thousand kilometers of duplicated highways, 6.655 CEU standard schools, 413 airport terminals and 128 port terminals.

Edson Vismona points out that, despite the negative numbers, the country is in a positive moment for the reduction of the illegal market. “The recently elected presidents in Brazil and Paraguay have already made public statements that they will face smuggling and organized crime on the borders, and that they want to work together to solve the problem. We believe that this is the right path, which will bring gains for all of South America. On the other hand, in cities, such as São Paulo, a center for the distribution of fake products throughout Brazil, actions to combat illegal trade intensify ”, He says.

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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Folha de São Paulo publishes series with presidential candidates on combating the illegal market

The Brazilian Institute of Ethics in Competition (ETCO) asked the top five presidential candidates in the polls about ways to combat illegal trade and its effects on crime.

The responses were divided into topics and are being published daily in the Folha de São Paulo newspaper. The series with the answers started last Monday, with the theme of resources. Yesterday, candidates responded on legislation.

Follow the publications here:

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Are you doing your part?

In times of heated discussions on ethics in politics, the Brazilian Institute for Ethical Competition (ETCO) runs a campaign to raise awareness among market, bakery and bar owners about the importance of everyone doing their part to have a country without corruption. The campaign started in the cities of Guarapuava (PR) and Franca (SP). Approximately 2 merchants will be impacted by the campaign that warns about three themes: sale of smuggled or stolen products, payment of taxes and trade in alcohol and cigarettes for children under 18. ETCO takes advantage of the contact with retailers to also publicize the campaign of the Comptroller General of the Union (CGU) “Say no to small corruptions”, which addresses various illegal or unethical attitudes, such as stealing cable TV, skipping the queue and buying counterfeit products.

In order to have an idea of ​​the size of the problem, in the first quarter of the year, the illegal cigarette market reached 57% of the total in the interior of São Paulo, an increase of 15 percentage points in relation to the same period last year, and exceeding the average national rate of 45%. In 2017, the smuggling of this product caused a leak of R $ 1,2 billion in the collection of the State of São Paulo, with 15,1 billion units of illegal cigarettes circulating freely in the market. In Paraná, the loss was R $ 293 million in the collection, with 3,3 billion units of smuggled cigarettes circulating freely in the market.

Despite the authorities' efforts to combat this crime, 48% of cigarettes sold in Brazil are illegal (according to Ibope) and come from Paraguay.