Working with the institutions and the law enforcement bodies in the fight against the illicit cigarette trade
Cigarettes continue to be one of the products that are the most affected by illicit trade. Their trafficking represents one of the main sources of finance for criminal organisations.
JTI constantly monitors developments in the illicit tobacco product market, which not only affects the industry but also has an impact on state coffers through losses in tax revenue, as well as creating instability in a production chain with over 200,000 employees in Italy, from tobacco growing to manufacturing and sales.
The illicit tobacco product trade has evolved over time, becoming a phenomenon of a transnational nature operated by organised crime and terrorist groups. A joint effort on a national and global scale between the private sector and law enforcement is therefore necessary to combat this problem.
This is why JTI is always ready to assist the institutions in finding solutions together which will ensure the sustainability of the sector and the attractiveness of the national economy for investments. This begins with an overhaul of the current tax system for the taxation of tobacco, aimed at establishing a new proposal based on a programmatic approach which would ensure steady tax revenues for the state.
Contraband
Genuine products that have been diverted from legal sales channels by smugglers for sale in other countries without payment of domestic duties.
Counterfeit
Cigarettes manufactured illicitly under a registered brand name with the intent of copying the legitimate product and deceiving consumers and to avoid paying duty.
They are produced without any respect for the many quality and safety standards that govern the legal tobacco industry.
Illicit whites
These are brands of cigarettes manufactured legitimately in a certain country, where their consumption is minimum.
They are cigarettes manufactured for the sole purpose of being smuggled into other countries where they are sold illegally. As confirmed also by the National Anti-Mafia Directorate, these cigarettes too are not subjected to “any quality checks on the raw materials used”1
For years, JTI has worked alongside law enforcement and in particular with the Guardia di Finanza (Italian Finance Police), supplying prompt and accurate information in order to tackle the problem.
Furthermore, it participates in a training programme throughout Italy, organised by INDICAM at the Guardia di Finanza provincial and regional headquarters. The aim is to provide useful information for combating the counterfeiting of tobacco products directly to local units involved in the fight against the illicit trade.
JTI also offers support to the Italian authorities by supplying the ADM (Customs and Monopolies Agency) with information concerning JTI branded products seized by law enforcement in Italy. In addition, JTI has entered into an agreement with the European Anti-Fraud Office (OLAF), to which seizures of over 50kg of product are reported.
The figures from the European Commission
“The illicit tobacco trade causes huge losses in terms of public revenue. If all the cigarettes sold on the black market were sold legally, the EU and its member states would make 10 billion euros annually.” European Commission. 2
The impact in Italy
Guardia di Finanza estimates indicate that the illicit trade causes revenue losses in Italy equal to 700 million euros a year.
Data from the Guardia di Finanza, published in June 2019 on their 245th anniversary , confirm an illicit phenomenon which has a huge impact on the community and on tax revenues: 335 tons of foreign tobacco products were seized by Guardia di Finanza units between January 2018 and May 2019.3
Notes:
1 - The National Anti-Mafia and Anti-terrorism Directorate – 2016 Annual Report (period 01/07/2015 – 30/06/2016)
2 - Report from the Commission of the Council and the European Parliament – Progress report on the implementation of the Commission Communication "Stepping up the fight against cigarette smuggling and other forms of illicit trade in tobacco products – a comprehensive EU strategy (Com (2013) 324 final of 6.6.2013)” OF 12.5.2017 – COM (2017) 235 final.