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How much do illicit cigarettes steal to the region?

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In 2014 Central America stopped perceiving more than US $ 113 million for tax evasion as a result from illicit cigarette trade.

According to the study “Ant smuggling an elephant on the market”, developed by the consulting firm CID Gallup to the American Chamber of Commerce of Costa Rica (AmCham) , smuggling has become one of the enemy of economies, institutions and the security of the Central American countries.

According to the World Bank (WB), the illicit cigarette trade around the world represents between 10% and 12% effect on market, that is equivalent to 600 billion illegal cigarettes, This generates a loss in tax collection between US $40 and US $50 billion per year, with a phenomenon that is growing rapidly around the world, becoming an activity of interest to international organized crime and terrorism.

The research highlights that the region stopped perceiving a total of US $ 113.6 million for tax evasion, being Panama the most affected country, with a total loss of US $41.9 million, just followed by Costa Rica with US $26 million and Guatemala, which did not receive US $19.2 million.

Also, El Salvador showed losses of US $ 15 million, while Honduras for US $ 9.3 million and Nicaragua by US $ 2.2 million. On the other hand, personal in charge of the study made special emphasis on public health in the region, which they claimed is affected by poor or no sources of health control in this activity.

“Panama is the fastest growing country in the incidences of illegal non-domestic marks with 67%, after the implementation of the regulatory law of trade for this product. Followed by El Salvador with 31%, Guatemala with 21%, Honduras with 20%, Costa Rica with 16% and Nicaragua with 5%,”explained the study.

In addition, the investigation shows that the security of the isthmus is another sector that is threatened due to this phenomenon. The money obtained from the sale of illicit cigarettes, due to its high profitability, is used to finance criminal organizations, such as the Maras in El Salvador and drug cartels as Zetas and Sinaloa in Belize, which have become major players in the transfer and distribution of this product, shows the report.

Where do they enter?

Free trade zones play a key role in the smuggling of cigarettes, as they are used as sites for collection, storage, labeling and distribution. This because of lax controls and the facilities offered for commercial activity, of which criminals take advantage. Therefore, Panama presents ideal conditions for the facilitation of this activity, and the area of influence is for Costa Rica and Nicaragua.

Additionally, the second zone of influence is Belize, which distributes cigarettes from China, India and Dubai to Guatemala, Honduras and El Salvador.

Urgent actions

Given the above background, The AmCham urges to strengthen inter-governmental efforts and public and private partnerships for a joint approach leading to the development of a holistic strategy that includes: a review of the current regulation to combat smuggling activity, the use of technology as an ally of the security forces, raising the penalties for those who commit this crime, to provide more financial and human resources to combat this activity and awareness campaigns resources.

The revision of the current regulation to combat smuggling is essential, as well as awareness of the population, and should provide more resources and use them better, especially in technology,” said Esteban Alvarez, manager of the consulting firm CID Gallup.

Source: Mercados & Tendencias

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