Saturday 25 September 2021

Contraband Smokes Big Business in Costa Rica

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(QCOSTARICA) – Following the anti-tobacco law passed in 2012 the sale of contraband cigarettes, brought in covertly from India and China, has grown exponentially.

The Amcham (American-Costa Rican Chamber of Commerce) published a study this week on the issue, since it hurts the fortunes of the US tobacco giants here.

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According to Amcham loose cigarettes (banned under the 2012 law) and illegal packs are plentiful, available in almost every neighborhood convenience store around the country.

The 2012 law was designed to help non–smokers and raise awareness of smokers by making cigarettes more difficult to buy and more expensive (raising taxes and prohibiting the sale of individual smokes).  But the effect has been to raise tax evasion, a record 33.5 million contraband cigarettes were confiscated in 2014, and 20 billion colones were avoided in taxes, according to the Tax Ministry.

Amcham reckons that 1 in 4 cigarettes smoked here are contraband. In 2012 the number of cigarettes confiscated was only 2 million.  The poor Chinchilla administration is to blame for the law, which doubled the price of cigarettes, and no one foresaw the need to put in countermeasures for tax avoidance, which is the unofficial national pastime.

Inexplicably the law to fortify tax collection, raised the minimum level of contraband from $5000 to $50,000 — which reduced the capacity of the fiscal police to prosecute traffickers.  The tax on cigarettes was also distributed to the CCSS for treatment of illnesses (60%), the Health Ministry (20%), the Institute on Alcohol and Drug Dependency (10%) and the Costa Rican Institute of Sport (10%).

Fiscal Police Assistant Director Melissa Rodriguez laments that no portion of the tax was allotted for enforcement.  With just 10%, at current levels, her budget would double.  Since contraband cigarettes cost 700 colones per pack and legal packs cost 1800, the incentive for cheating is obvious and the need for enforcement logical.

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Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

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