K550mil lost to illegal cigar trade

By CLARISSA MOI
THE country will lose K550 million in revenue as a result of the illegal cigarette trade this year alone, according to a report.
The PNG Manufacturers Council with the support of British American Tobacco (BAT) and the PNG National Research Institute engaged FTI Consulting to conduct an in-depth study on the size and value of trade and consumption of tobacco in the country.
FTI Consulting director for economics and financial Natalia Southern said the study estimated that the direct tax losses would be K136.5mil, while indirect tax losses would be K413.5mil.
Southern said there were also other impacts on economic growth as well as on employment.
PNG Manufacturers Council chief executive officer Chey Scovell presented the report to Prime Minister James Marape during the Port Moresby Chamber of Commerce and Industry (POMCCI) breakfast with the business community and distinguished guests at the Hilton Hotel yesterday.
Scovell said the report also made some recommendations such as establishing an independent taskforce with dedicated resources, additional investment in detection at major ports, review existing legislations, among others, that were likely to address illicit tobacco in the short term.
He also noted that the country had an illicit trade problem.
“Anybody that goes to the market will see many packs of illicit trade cigarettes for sale and if you go to the rural market you will see brus.”
Scovell said the report found that the country’s total tobacco consumption last year was estimated at around 4.65 billion sticks.
“Cigarettes accounted for 50 per cent of the total consumption followed by brus at 42 per cent and coarse cut cigarillos (like Spear) at about eight per cent,” he said.
“On excise values alone, if all of that tobacco trade was legal, the government would have received over K2.15bil in excises, and that’s if the tobacco was made locally.
He said about 35 to 40 per cent of that was locally made.
Commerce and Industry Minister Wera Mori while acknowledging this independent report, said the problem of illicit trade and in this case in the tobacco market, had been on-going and it was about time to track that down to be able to recoup what the State had lost.
“I support the efforts done by the study,” he said.
“But the onus is now upon us, not only the Commerce and Industry Department but other stakeholders and individuals to work together in addressing illicit trade.”