Cigarette fraud leaves smoking budget hole

Illicit cigarette sales are putting a serious dent in Vietnam’s tax collection despite government measures to stub out the trade.

The Vietnam Tobacco Association (VTA) said an estimated 813 million cigarette packs were illegally brought into Vietnam in 2010, accounting for approximately 18 per cent of the local market consumption. The figure was equivalent to an area of 11,000 hectares of tobacco leaf and meant job losses for over 50,000 labourers in four months.

At the same time, the VTA reported, illegal sales of cigarettes spelled losses to the state budget of $200 million per year in 2009 and 2010. Tobacco and cigarette tax occupied 2 per cent of the state’s annual budget collection.

According to the government’s Central 127 Steering Committee, an anti-trade fraud, fake goods and smuggling entity, in 2009 and 2010 local authorised agencies dealt with 25,637 cases involving the transport and trading of fake and illicit cigarettes.

They also seized over 18.2 million illicit cigarette packs. Localities seeing major busts were Ho Chi Minh City, Can Tho city, and the provinces of Quang Tri, Long An, An Giang and Kien Giang.

In 2009, eight cases involved criminal charges. However, since last year’s introduction of Decree 76/2010/ND-CP which set out new penalties for tobacco trading violations, some 40 cases involved 48 violators had resulted in criminal charges. In the first two months of this year alone, 12 cases involving 12 violators were subject to criminal charges.

Over the past few years, the tobacco industry has created employment for over 200,000 local workers and secured the livelihoods of some 800,000 people.

In 2010, the industry notched up earnings of over $143 million in export revenue and contributed more than VND11,700 trillion (over $585 million) to the state budget.

According to the Central 127 Steering Committee, the ministries of Industry and Trade, Public Security, and Finance and the committee itself would this year continue to work with local authorised agencies to crack down on illicit cigarette traders in big cities and in key areas along Vietnam’s borders. – VIR

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Posted by VBN on Aug 22 2011. Filed under Industry. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry