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Illegal Tobacco Market Grows in Costa Rica

Costa Rica News – Costa Rica’s illegal cigarette seizures are up five-fold, since last year. This suggests that groups are capitalizing on the new tobacco law and increasing the contraband market. Authorities recovered 12.3 million packs of illegal cigarettes, so far this year. In the whole year of 2012, there were just 2.3 million seized.

illegal tobacco in costa rica 1While the tremendous increase in cigarettes confiscated suggests an out of control flow of them into the country, other factors come into play, too, such as more effective policing. The surge has been occurring since March 2012, when an anti-smoking law took effect. This law increased taxes on cigarettes. From 2011 to 2012, there was a decrease in illegal cigarettes found. It seems that in 2013, many more people have found out about illegal cigarettes and how to get them, reversing the trend drastically.

People can’t or won’t pay for the added taxes on legal cigarettes. The tax revenue has gone down from $51 million to $34 million (assuming that November and December will follow the average figures) between 2012-2013, despite the increased taxes.

There are five organized criminal groups behind contraband cigarette trade. The cigarettes mostly originate from China, Canada, and Paraguay, and are trafficked through Panama. In 2008, Latin America was home to 21.4 percent of the world’s illegal cigarettes. It was the region with the largest portion of this illegal trade. Before the anti-smoking law and tax, 70 percent of cigarettes smoked in Panama were illegal, compared to only 10 percent in Costa Rica.

The law put a pressure on the market that opened the doors to the bordering thriving market in Panama. Panamanian criminals were already using the easy access to Costa Rica to bring cigarettes through to other countries. Many of them are now staying in the country.

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