In São Paulo, the cigarette market leader is smuggled from Paraguay

São Paulo, 16 May 2016 - The National Forum Against Piracy and Illegality (FNCP), launches an unprecedented campaign to alert the population and authorities about the relationship between increasing taxes and encouraging organized crime and cigarette smuggling. With each new increase in taxation on this product, the similar smuggled from Paraguay becomes more competitive and profitable for criminal factions. These groups, with the profit obtained from the sales of the smuggled cigarette, finance the activities of drug and arms trafficking, cargo and car theft.

The campaign, which also includes the hashtag #impostocrescecrimeagradece, has the participation of actors Jackson Antunes and Caco Ciocler, and will be shown on television and on the internet. Produced by the VitóriaCI agency, the films also include a testimony, extracted from a documentary produced by journalist Adriana Bittar, of a smuggler who, under the condition of anonymity, explains that the crime has celebrated successive tax increases on cigarettes and that the points sales multiply, selling illegal cigarettes. “Crime thanks you” is the motto used to draw attention to the direct relationship between the increase in taxes and the escalation of violence.

“In São Paulo, organized crime launders money and is financed with resources from cigarette smuggling. The money serves to keep the leaders of the criminal faction in jail and to activate arms and drug trafficking, in addition to other illegal activities, ”says Edson Vismona, president of the Forum. According to him, it is necessary to put an end to the romantic view that smuggling is a “minor crime” and to the old image of the “sacoleiros” who brought goods from Paraguay to resell in large Brazilian cities. “Cigarette smuggling combines high profitability with low risk, ideal for organized crime. The money raised from the sale of Paraguayan cigarettes moves a billion dollar figure and finances many other criminal activities, including corruption and murders, ”adds the FNCP leader.

São Paulo was precisely the state that promoted the most recent upward movement in cigarette taxation. The increase in ICMS tax rates on cigarettes from 25% to 32% came into effect in May and has already been encouraging even more smuggling of the product. Since 2010, when there was an increase in the IPI tax rates for cigarettes, the share of smuggled products in the state of São Paulo rose from 23% to 41% in 2015. With the recent increase in the ICMS tax rate in São Paulo, the contraband share this year, it should reach 62% of the total. In the last three years, São Paulo started to have the largest volume of smuggled cigarettes in Brazil, assuming the condition of distribution center for the whole country. The Eight cigarette, from Paraguay, is the market leader in the state with 22% market share. Currently, the average tax rate for the sector in Brazil already exceeds the foreshortening percentage of 80%.

In 2015 alone, the crime of smuggling caused losses of R $ 115 billion to Brazil, 15% more than in the previous year. This figure includes the losses suffered by the national industry and the evasion of taxes, cutting investments, such as those aimed at security and public health.

To watch the campaign, visit www.fncp.org.br/impostocrescecrimeagradece/

The National Forum Against Piracy and Illegality (FNCP) is a civil, non-profit association, formed in 2006 by sectorial business entities, companies and unions, including ETCO. It is the largest Brazilian association with an exclusive focus on combating illegality.