[Intl-tobacco] U.K. Cigarette smugglers to lose assets (fwd)

[Robert Weissman]

The Guardian - Monday March 13, 2000

Cigarette smugglers to lose assets

David Hencke, Westminster Correspondent

Gordon Brown will announce a huge clampdown on cigarette and tobacco
smuggling in his budget next week, including the use of the same penalties
to seize the assets of the criminal gangs behind the trade as of those
handling heroin.

The tough new stance follows growing panic in the treasury that it is
losing large amounts of revenue from tobacco smuggling as people turn to
illegal suppliers for cigarettes and hand-rolled tobacco.

Last month the Guardian revealed how the UK-based British American Tobacco
is implicated in the smuggling of billions of cigarettes world-wide.
Latest figures show that =A32.4bn a year is lost to the exchequer from
tobacco smuggling - enough cash to fund entire government departments or
pay for almost a fifth of the NHS hospital budget.

The sale of hand-rolled tobacco is almost entirely transacted on the black
market, costing the treasury =A3800m a year. This is up by 30% since the
1997 election.

Some 80% of all sales take place illegally in pubs, clubs, hotdog stalls
and through illegally supplied tobacconists. Punters are saving =A34 a time
on supermarket prices for a standard pouch and regular "trade routes" have
been set up between Belgium and Britain. In Belgium the tax on hand-rolled
tobacco is a quarter of the level in the UK.

Whitehall is alarmed that the trade in smuggled cigarettes has more than
doubled since 1997, from 10% to nearly 25% this year. This means that one
in four packets of cigarettes are now bought illegally. If this trade
reached the levels of that in hand-rolled tobacco the treasury stands to
lose =A38bn a year.

Customs intelligence operations have revealed that crim inal gangs used to
dealing in heroin and cocaine are switching to tobacco because they can
expect lighter jail terms and do not suffer the same penalties, such as
the seizure of all assets.

The result is that ministers have been steadily ratcheting up the
penalties over the past year - including taking away lottery licences from
tobacconists caught receiving smuggled cigarettes and destroying vehicles
caught with smuggled goods. This is because gangs were found to be
attending customs auctions of seized goods and buying back their vehicles
at knockdown prices.

The latest pre-budget move will be announced tomorrow when Dawn Primarolo,
the paymaster general, visits Dover to announce high-profile measures to
deter tobacco smugglers, including new warning signs at ports of entry.
Seized vehicles will be put on view.

Mr Brown wants to go further and is said to be determined not to give in
to criminals by lowering taxes - even though a report commissioned by the
treasury has recommended that this should be done. He also has pledged
that any increase in tobacco duties will go directly to the NHS. Customs
regards revenue on hand-rolled tobacco as a lost cause unless the Belgians
put up taxes, which they are not keen to do.

This leaves Mr Brown with no alternative but to get Jack Straw, the home
secretary, to toughen penalties. Under misuse of drugs legislation,
smugglers and dealers face life imprisonment and those smuggling cannabis
face 14 years in prison. Smuggling tobacco carries seven years in jail.

The treasury wants to force convicted smugglers to prove that all their
assets are not from smuggling or face confiscation of everything.