Tobacco Smugglers Losing UK Market Share

Source from:  The Guardian  05/08/2013

Britain is winning the war against tobacco smugglers who target cheap cigarettes at poor smokers and children and deny the Treasury revenue, according to a parliamentary report.

In 2000, one in five of cigarettes smoked came from the black market. But by 2010-11 traffickers' share of the cigarette market had fallen to 9%, according to the report on the illicit tobacco trade by the all parliamentary group on smoking and health.

Over the same period, the share of the UK's hand-rolled tobacco market originating with smugglers fell from 60% to 38%, an inquiry by the group of MPs and peers found.

Joint action by HM Revenue & Customs and the UK Border Agency has disrupted smugglers' efforts to bring in and distribute their products, as have partnerships involving local police forces, councils and NHS organisations, the report says.

Stephen Williams, the Liberal Democrat MP who chairs the group, said the success disproved the industry's claims that high taxes on their products in the UK boosted the supply of illegal tobacco.

He said manufacturers' claims that forcing cigarettes to be sold in standardised packaging would increase the illicit trade were "self-interested and at times seemingly disingenuous industry lobbying".

Legal agreements the EU has concluded with the big cigarette firms to reduce trafficking has also helped make fewer available, the parliamentarians say.

Their report highlights how the previously easy availability of black market tobacco in the UK was partly due to producers deliberately exporting more cigarettes than were wanted to other countries, knowing that many would be smuggled back into Britain.

Sarah Woolnough, Cancer Research UK's policy director, said: "This report is further evidence that the tobacco industry should not be listened to when developing health policies aimed at reducing the devastating impact of smoking."

The Tobacco Manufacturers Association claimed that more recent data showed that "the level of cigarettes consumed that are not UK tax paid has risen from 17% in 2011 to 21% in 2012" and that figures from the Office of Budget Responsibility last week showed the government expected to receive £200m less in tobacco revenue in 2012-13.

A spokesman for the association claimed the inquiry was biased because it had not given a fair hearing to the industry and did not mention firms' contributions to reducing smuggling. Enditem

The FDA has yet to outline its plans, leaving plenty of speculation about whether the agency will regulate different cigars differently — without creating loopholes.

"If they can't figure out a way to keep this thing from being gamed, then they basically shouldn't make any exemptions," said Richard A. Daynard, a Northeastern University law professor and president of its Public Health Advocacy Institute.

The 2009 tobacco control law banned candy and fruit flavorings in cigarettes, which had been shown to disproportionately appeal to young people. Some companies reacted by making small changes in the products, such as adding tobacco to the wrapper to help them meet the legal definition of cigars.

Another 2009 federal law put in place sharp tax increases on cigarettes and small cigars but spared larger cigars. In response, companies added weight to their products to qualify for the lower taxes.

Even as cigarette smoking decreased between 2000 and 2011, consumption of loose tobacco and cigars grew 123 percent, according to the Centers for Disease Control and Prevention. The CDC found that tax disparities prompted many smokers to switch from cigarettes to other products such as cigars.

In at least six states, including Maryland, youth cigar smoking now equals or surpasses cigarette smoking, according to numbers compiled by the Campaign for Tobacco-Free Kids — a figure the group says underscores the urgency of FDA regulation.

Spann hopes that the FDA at least decides to exclude the small companies and storefronts that make and sell premium cigars — or that if the agency doesn't, Congress will.

"There are 85,000 Americans working in or around the premium cigar market in America," he said. "The government should be helping them, not trying to regulate them out of business."

Matthew Myers, president of the Campaign for Tobacco-Free Kids, said there is no evidence that the FDA intends to impose a host of onerous, unnecessary regulations on mom-and-pop manufacturers of large cigars. "They have bigger fights to fight," he said. Enditem