Contraband cigarettes worth billions seized

 

Destruction of millions of contraband cigarettes confiscated in a special operation conducted by the Police Force and TRA in Mbeya last year. The cigarettes were legally exported to Zambia and returned to Tanzania as contraband by an unknown network of unscrupulous traders. PHOTO | CORRESPONDENT 

By The Citizen Reporter

In Summary

• The three suspects who were arrested will be charged in court and could face up to 15 years in jail or pay Sh50 million in fines

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Dar es Salaam.  The Police Force, in collaboration with the Tanzania Revenue Authority (TRA) and the Fair Competition Commission (FCC) have arrested three people in various parts of Mbagala  for ........................................
stocking and selling contraband cigarettes worth billions of shillings in the past week.

The three (names withheld) will be charged in court and could face up to 15 years in jail or pay Sh50 million in fine for selling cigarettes without paying due tax and evading taxes.

Acting Dar es Salaam Special Zone Police Commander,  ACP Simon Siro confirmed the reports yesterday.

Illicit trade in cigarettes has picked up momentum since 2012 due to excessive excise tax increases.

It is estimated that four per cent of all cigarettes sold in Tanzania in 2014 came in through smuggled channels. In 2012, the same stood at two per cent.

The cigarettes come mainly from Zambia and Congo DRC involving legally exported products from Tanzania which are then smuggled back into the country by a network of unscrupulous traders without paying taxes.

At current excise and VAT rates (36 per cent of the retail value), the tax revenue loss to the government is over Sh10 billion.

Last year, Tanzania Cigarette Company (TCC) figures show a total of 200 million cigarettes was confiscated by the Police Force and TRA in various operations around the country. TCC Corporate Affairs and Communications director, Paul Makanza, said if left unchecked, the trend would further reduce government’s earnings through taxes.

“For example, if collection efficiency were to fall from the current 96 per cent to 90 per cent today, the government would lose about Sh16 billion in tax revenues,” he said.

He said with average daily disposable incomes of just under Sh2,500 which is equivalent to a price of a packet of cigarettes, most consumers cannot afford to buy a pack of cigarettes. “As a result, they tend to seek cheaper alternatives, including illicit cigarettes. Once consumers have a regular source of supply of illicit tobacco products it becomes extremely difficult to get them to return to purchasing legal tax paid goods,” he said.

For  his part, the TCC Company Services and Security Director Frank Usiri, commended the Police Force and TRA for conducting country wide crack-downs on contraband products and called on authorities to apply the full might of the law on perpetrators