Unpublished campaign warns of the dangers of smuggling

The cheapest is not always the best choice. Even more when the option is for smuggled, pirated or counterfeit products.

The Brazilian Association to Combat Counterfeiting (ABCF), in partnership with the Brazilian Institute of Ethics in Competition (ETCO), launched this Wednesday, July 23, the campaign "Promotion Achou, Perdeu!"

The campaign's proposal is to draw the attention of consumers and society to the risks that products from contraband bring to safety and health. The tone of the communication follows the line of the great sales of popular stores, but with a focus on unknown components and the dangers generated by pirated software, illegal cigarettes from Paraguay and toys without Inmetro certification.

“We want to involve society and encourage a change in consumer behavior, showing that often what appears to be an advantage, in fact, only brings problems and harms to health and increased crime in the state”, explains Rodolpho Ramazzini, director of the Association Brazilian Fight Against Counterfeiting (ABCF).

"As well as the health and safety risks were not enough, the increase in smuggling also significantly affects the state's revenue", concludes Ramazzini.


Aimed at classes B and C, which are among the largest consumers of smuggled, pirated or counterfeit products, the campaign “Promotion Found, Lost!” was based on various statistics and research by Ibope, which helped to identify the points that hurt and sensitize the consumer the most.

Campaign reach

The campaign will run in the metropolitan region of Curitiba between the months of July and October and will be on several billboards, bus shelters, on TV channels, radio and newspapers.

After this period, the entities will analyze the results - such as the drop in the consumption of smuggled and counterfeit products - to evaluate the possibility of expanding the circulation to other states and cities affected by this problem.

PF seizes 600 boxes of contraband cigarettes; three were arrested

Source: G1 (Rio de Janeiro - RJ) - 22/05/2012

Apprehension took place on Monday (20), in Marechal Cândido Rondon (PR).

Smuggling was hidden on a rural property.

Three people were arrested with 600 cases of smuggled cigarettes from Paraguay in Marechal Cândido Rondon, in western Paraná, on Monday night (20). According to the Federal Police (PF), 350 boxes were in a truck that transported grain and the rest was on a rural property.

In addition to cigarettes, a car and a motorcycle were also seized, which would be used as scouts.

Driver is arrested with 2 thousand packages of cigarettes in Prudentópolis

Source: Rede Sul de Notícias (Guarapuava - PR) - 21/05/2012

Contraband was being taken from Foz do Iguaçu to Curitiba

A driver was arrested with two thousand packages of smuggled cigarettes from Paraguay last night, Sunday (20th), in Prudentópolis. According to the Federal Highway Police (PRF), the approach was during a routine inspection on BR-277.

The goods were hidden in a car and would be taken from Foz do Iguaçu to Curitiba.

The prisoner and the contraband were taken to the Federal Police in Guarapuava.

Men are detained with smuggled cigarettes in Itapeva, SP

Source: G1 (Rio de Janeiro - RJ) - 19/05/2012

The arrests were in Vila Isabel.

Police found 20 boxes of the product in two vehicles.

Two men were arrested on suspicion of smuggling cigarettes in Itapeva (SP). They were in two cars loaded with 20 boxes of the product.

According to the Military Police, the men were caught in Vila Isabel. According to the police report, three cars were sighted during the patrol. During the approach, a driver managed to escape. The other two were stopped and the police found the cigarettes of illegal origin.

The prisoners and the seized products were taken to the Federal Police station in Sorocaba (SP). Men must respond in freedom for smuggling.

Minimum price: decisive step against tax evasion


Source: Correio Braziliense (May 26, 2012)

Brazil's socioeconomic reality has changed a lot in the last 10 years. Research carried out by the Brazilian Institute of Geography and Statistics (IBGE) shows that several indicators have had significantly improved performance, such as per capita income (increase of 176%) and unemployment rate (reduction of 45%). But that was still not enough to change the sad scenario of smuggling and piracy in our country.

The Underground Economy Index, released at the end of 2011 by the Brazilian Institute of Competitive Ethics (ETCO) and the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV), fell by 1,1% last year in relation to 2009. After registering growth for two years (2008 and 2009), with a speed close to that of GDP, the underground economy accentuates the rate of decline, reaching, for the first time, around 17,2%. Despite this, the volume of money involved in the shadow economy has grown (from R $ 589 billion in 2009 to R $ 653 billion in 2011).

The explanations for these numbers were found in a survey by Fecomércio-RJ / Ipsos. The result indicates that the number of Brazilians who consume products of irregular origin jumped from 42% in 2006 to 48% in 2010. Most consumers heard in the survey justify the price difference between the legal and the illegal product as the main motivator of the purchase.

Many Brazilian consumers have not yet realized that the lowest price includes tax evasion, embezzlement, contraband, lack of product guarantees and, possibly, worse quality. How to deal with a problem that does not come up against physical boundaries and is culturally accepted by society? It is evident that stricter laws can contribute to discourage the practice of contravention. Today, very little is done on a punitive basis, both against those who co-opt someone and against those who are co-opted.

The tax issue is perhaps the most important in this regard. Much has been discussed about the tax burden in Brazil, one of the highest in the world, and especially about the difficulty in the process of paying taxes. If we take the cigarette sector as an example, we see that, in 2011, the share of products sold originating from smuggling and manufactured by companies that possibly do not collect their taxes properly reached about 30% of the Brazilian market. As a result, tax evasion is estimated to have reached the R $ 2 billion mark.

The formal industry, pressured by the high tax burden, today above 60%, is forced to practice prices much higher than those offered by the illegal market. The difference between prices charged by the formal industry and smuggling in some Brazilian cities can reach a stratospheric 240%.

Through Law No. 12.546, sanctioned on December 14, 2011 by President Dilma Rousseff, which among other topics will introduce the change of the IPI system for cigarettes, increasing the tax burden to close to 70% by 2015, the federal government created the minimum price for the sale of cigarettes. The goal is to curb tax evasion caused not only by smuggling, but mainly by companies that fail to pay all taxes due. The measure brings penalties to retailers who sell cigarettes below R $ 3 (2012), and the merchant may have the product seized and still be disqualified from selling cigarettes for five years.

For the Federal Revenue, the law aims to "curb the tax evasion that occurs in the cigarette manufacturing sector by the predatory practice of prices that encourage unfair competition in the sector". The initiative is an important step in the fight against the illegal market, but it cannot come alone. In order to prevent it from ending like other laws that “do not stick”, the inspection and the appropriate punishment must be companions inseparable from the minimum price.

The fixing of the minimum price, according to the IRS, "will provide greater competitiveness among companies, ensuring the implementation of favorable conditions for the development of activities in an environment of fair and fair competition". However, the established minimum price is still far from being able to cover all costs, margins and taxes paid by manufacturers.

With the new IPI rules, selling a pack of cigarettes for R $ 3 and paying all taxes will possibly mean still working with a negative margin, which increases the risk of probable tax evasion. Economic-financial analyzes show that, ideally, the minimum price should be set at a level between R $ 3,50 and R $ 4 in 2012.

In order for the country to continue moving forward and to count on an even more attractive business environment, it is essential to persevere in reducing the current levels of tax evasion, not only in the cigarette sector, but in all those that stand out for the high tax evasion, in a way to give priority to an effective balance between market agents, in line with what the principles of free initiative and free competition set forth in Article 170 of the Constitution assert.

Finally, the statement that the increase in taxation on cigarettes would lead to a reduction in consumption is not sustained, since, in practice, it tends to imply a migration of consumption to the illegal market, which, with artificially low prices, constitutes in an even more attractive offer for new consumers.

Robert Abdenur

Diplomat and executive president of the Brazilian Institute of Competition Ethics (ETCO)

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Smuggling grows with recession in Europe

Valor Econômico

Like millions of Spaniards, Alicia García is forced to make sacrifices to face the country's debt crisis. The 32-year-old beautician used to smoke a pack a day, but has now reduced it to just five cigarettes.

“Smoking just became too expensive,” says García, while smoking on a street in central Madrid. "I have to think twice before lighting."

Under pressure from a growing recession and increases in consumption taxes, the more than 10 million Spanish smokers have become perfect targets for cigarette smugglers. Illegal imports now represent between 7% and 8% of total cigarette sales, a year ago they were practically nonexistent, according to the association of tobacco companies in the country.

The number of packets of cigarettes sold in Spain fell 17% last year, according to the Tobacco Market Commission, which tracks only legitimate trade.

“Tobacco smuggling and counterfeiting, which had been eradicated since 1993, came back strongly last year,” says Jaime Gil-Robles, director of business affairs for Altadis, a local unit of the Imperial Tobacco Group, which dominates about 30% of the Spanish market, € 11,3 billion.

In just one week in January, Spanish authorities confiscated more than 1 million illegal packs of cigarettes, worth approximately € 4 million.

The problem is not unique to Spain. The French authorities confiscated 462 tonnes of products with smuggled or counterfeit tobacco in 2011 - 33% more than in 2010. Much of this was destined for the United Kingdom and Ireland, which have the highest tobacco consumption taxes in the European Union ( HUH). In Dublin, a pack of Marlboro costs € 9,10, compared to the price of € 6,20 in Paris.

"I've been working in this area for four years and the problem only makes it grow, grow, grow," says Ross Marié, who heads the unit in charge of combating illegal trade at British American Tobacco, maker of the Lucky Strike and Dunhill brands. Morgan Rees, director of regulatory communications at Philip Morris International, owner of the Marlboro brand, estimates that illegal sales dominate about 10% of the market in Europe.

While smuggling imports from China have stabilized, those from Russia and other Eastern European countries are on the rise, says Austin Rowan, head of the tobacco and counterfeit goods unit at the European Anti-Fraud Agency (Olaf), in Brussels.

"The deep economic crisis in certain markets, such as Lithuania, Latvia, Romania and Spain, has fueled the problem," he says.

Spain's unemployment rate, at 22,9%, is the highest in the EU. Also take into account the ban on smoking in public places in place since the beginning of the year and the tax increase of € 0,50 per pack and you have the “perfect storm”, says Imperial Tobacco’s chief executive, Alison Cooper . The multitudes of Spaniards smoking outside bars and restaurants are an easy market for street vendors of smuggled cigarettes, says Marcelino Gamez, president of Onae, a lobby group that represents some 2,5 companies in the tobacco industry. tobacco. A € 4,25 pack of Marlboro can be purchased for around € 2,25 in the parallel market.

It is not just cigarette manufacturers who lose. The illicit tobacco trade costs European governments about $ 10 billion in lost revenue, according to Olaf. In Spain, Altadis has defended a two-year freeze on tobacco tax increases, while Imperial's Cooper is hoping that the government will relax the smoking ban.

These are concessions that would enrage public health activists, such as Armando Peruga, manager of the Tobacco Free Initiative, of the World Health Organization (WHO). Peruga points out that Spain, along with Italy and Ireland, has been successful in using tax increases to decrease the number of smokers. "Tobacco companies want to scare the government with the scarecrow that, with the increases, it loses money in tobacco taxes", he says. “This is a fallacy. When smoking is banned in public spaces, the only power that companies have is to reduce prices, [power] that they lose when the government raises taxes. ”