Zambia: Govt Losing K16m in Cigarette Smuggling

Source from:  Times of Zambia  07/17/2013

Government loses more than K16 million in tax revenue annually due to rampant smuggling of cigarettes, the Zambia Chamber of Commerce and Industry (ZACCI) has said.

The main sources of cigarette smuggling in Zambia are Zimbabwe, Malawi, Tanzania and the Democratic Republic of Congo.

According to a ZACCI journal, illicit cigarette products have had an impact on both the Government tax revenue and British American Tobacco Zambia.

ZACCI said estimates indicate that illicit levels were about seven per cent of the market, translating into about 105 million sticks.

"Though the cigarette tax stamp legislation is in force, cigarettes without stamps are sold openly on the Zambian market especially in the major markets of
Lusaka, Kitwe and Livingstone," ZACCI observed.

It said the infrastructure at the border posts had remained undeveloped, and that the existing infrastructure was struggling to cope with the increasing volume of trade in the border posts.

ZACCI also observed that inadequate sanctions for smuggling were insufficient to be a deterrent, adding that in most cases only the product was seized and the culprits were left free or asked to pay a fine.

ZACCI added that in the case of counterfeit cigarettes the law protecting brands and trademarks was outdated and that the penalties were not harsh to deter illicit activities.

It has also attributed the prevalence of cigarette smuggling to consumer behaviour, saying the majority of the population who consume cigarettes live below the poverty datum line and were sensitive to price differentiation. Enditem