|Philip Morris (New Zealand) Limited congratulates Tongan law enforcement authorities on the recent interception of a large quantity of illegal Manchester cigarettes inside a shipping container at the Queen Salote wharf in the capital, Nuku’alofa.|
|Philip Morris (New Zealand) Limited’s General Manager New Zealand & Pacific Islands, Jason Erickson, said the seizure is significant and concerning given the small size of the Tongan market.
“The criminals behind the tobacco black market are robbing governments and taxpayers of billions of dollars in tax revenues and damaging legitimate businesses,” Mr Erickson said.
“Governments across the region need to reassess the tax and regulatory measures which have created the environment for the growth of this insidious trade because the tobacco black market will only grow as tobacco taxes are increased.”
“If these cigarettes had been sold on the black market in Tonga, the criminals behind this would have avoided payment of hundreds of thousands of Tongan paʻanga in excise tax at a time when the government is focused on addressing significant financial challenges,” Mr Erickson said.
Mr Erickson said the smuggling and selling of illegal tobacco is a growing concern across the region as government taxes push the price of legal tobacco products higher, creating incentives for organised crime gangs involved in the illegal tobacco trade.
In March, Fiji Revenue and Customs Authority officers were reported to have intercepted processed tobacco in tea bags concealed inside a machine in Suva.
“Smuggling and selling illegal tobacco is a serious crime and we’re pleased to see authorities increasing their efforts to stamp out the tobacco black market,” Mr Erickson said.
“But it’s a problem that will only get worse in Tonga and the region with rising tobacco taxes and extreme regulation.”
The black market in tobacco has reached record levels in Australia where cigarette prices are among the highest in the region. The Australian Crime Commission (ACC) Organised Crime in Australia 2015 Report found that “organised crime remains entrenched within the illegal tobacco market in Australia” because smuggling and selling illegal tobacco is perceived as a “low risk, high profit enterprise.”
And a study of the tobacco black market in Australia by KPMG indicated the tobacco black market has grown by nearly 30% in two years and in 2014 accounted for 14.5% of total consumption. Had that tobacco been sold legally, KPMG estimates the Australian Government would have received approximately AUD$1.35 billion in tobacco taxes last year.