North of England Illicit Tobacco - FAQs

Illicit tobacco can be either smuggled, bootlegged or counterfeit:

• Smuggled: these are generally legitimately manufactured tobacco products which have evaded payment of tax by being illegally transported, distributed and sold.
• Bootlegged: these are tobacco products which are purchased in a country with a low level of taxation and illegally brought into the UK, evading payment of tax.
• Counterfeit: these are illegally manufactured tobacco products which are often made abroad, but sometimes in the UK. They are sold cheaply and tax free and vast profits are made throughout the supply chain.

All tobacco products are harmful but illicit tobacco is a real concern in some of our communities.  As smuggled and counterfeit cigarettes and tobacco are far cheaper – up to half or a third of the price – of legal, duty paid products they greatly reduce the incentive for people to quit.

The illicit tobacco trade encourages children and young people to smoke. A recent survey by Trading Standards North West showed that as it becomes harder for the under 18s to buy from legitimate traders they are increasingly turning to illicit sources such as street sellers, “fag” or “tab houses” or even ice cream vans.

Yes, they have, but there is still a long way to go. While the average smoking rate in the adult population reduced from 28% in 1998 to 20% in 2011, smoking amongst some groups is still far higher including those with the lowest incomes.  These groups suffer the highest burden of smoking related illness and death.  Smoking is the single biggest cause of inequalities in death rates vetween the richest and poorest in our communities.  Consequently, tackling tobacco use overall is centrel to improving health.

This isn’t just about ensuring that people pay their taxes. All tobacco is harmful but easy access to cheap tobacco increases the health risks because it encourages people to keep smoking and smoke more. On average smokers of illicit tobacco smoke two cigarettes a day more than who don’t buy cheaply

The World Bank estimates that a 10% rise in the price of tobacco products reduces tobacco consumption by 4%. The availability of illicit tobacco at a fraction of the legitimate product price reduces the incentive to quit. In California, where the smoking rate has fallen to less than 14%, research has attributed the majority of the decline to maintaining high price through taxation.

No. Apart from the health risks Her Majesty’s Revenue and Customs (HMRC) estimates that the illegal trade results in around  £2bn a year in lost revenue.

There is also evidence that the illicit tobacco trade has strong links to organised crime.  Since HMRC's 'Tackling Tobacco Smuggling' strategy was first introduced in 2000 the size of the illicit cigarette market has been cut by almoist half with more than 20 billion cigarettes and over 2,700 tonnes of hand-rolling tobacco seized.  There have been more than 3,300 criminal prosecutions for tobacco offences following action by our officers.

Terrorist organisations also use illicit tobacco to finance their activities. The Centre for Public Integrity in the USA details what it calls “the booming global trade in smuggled cigarettes” on its web site Tobacco Underground[1].  This features investigations demonstrating the links between illicit tobacco and terrorist or criminal organisations including the Taliban and the Mafia.

The illicit tobacco trade is a global activity, and while considerable efforts are being made in the UK to tackle illicit tobacco action is needed internationally. Recently delegates from 160 countries agreed on an international treaty to eliminate the trade in illicit tobacco as part of the Framework Convention on Tobacco Control

The North of England Tackling Illicit Tobacco for Better Health Programme is the first of its kind both in this country and internationally. It brings together a wide range of partners including regional tobacco control programmes (Fresh and Tobacco Free Futures); trading standards groups and other local authority teams; HM Revenue and Customs and the UK Border Agency.

The programme has been independently evaluated by the UK Centre for Tobacco Control Studies who reported that:  "The programme offers an exemplar of partnership working which has shown great promise in terms of finding impactful consumer messages about the harmfulness of illicit tobacco to communities, raising awareness of the issue, increasing intelligence and changing behaviours, and therefore deserved to be widely disseminated." 

HMRC estimates that 10% of cigarettes and 46% of hand rolling tobacco is illicit. This is considerably less than would have been the case if detection and enforcement action had not been taken in recent years but it is still a substantial share of the UK market.

The breakdown of cigarettes seized by HMRC in 2009/10 was:

 Genuine UK brands -6%

• duty free or tax-paid in low taxing countries e.g. Spain, Poland
• typically best selling premium brands

 Counterfeit UK brands - 48%

• fake UK duty paid – with the fiscal mark
• fake EU duty paid goods, including fake foreign tax stamps
• typically best selling premium brands

Non UK and illicit brands - 46% (also known as 'illicit whites')

• cannot be legitimately bought in the UK
• mass-produced in factories, mostly outside the EU
• examples include Jin Ling, Raquel, Palace

Illicit tobacco is bought and sold in a wide range of settings and this varies from region to region.  Research in the North East highlights three main channels of illicit tobacco sale.  Pubs, clubs and private addresses were the two leading venues where the purchase of illicit tobacco takes place, followed to a lesser extent by shops.  The sale of illicit tobacco is mostly from acquantances and straners although shop-based purchases are more likely to be from a stranger.

Detection and enforcement teams are now using new hand-held scanners which can quickly tell them whether they are looking at illicit or legal products.

The Smokefree North West survey[1]  showed that purchasing is evident across all demographic groups, but with some skewness to men, those aged 25 to 64, lower socio-economic groups, the working single and those without children.

 However, as smoking is far more prevalent in “routine and manual” groups (e.g. van drivers and shop workers) and in poorer communities they are targets for the illicit tobacco trade.

Quite simply, because of the price. Respondents to surveys in the North West and across the North of England said that they were motivated by “a bargain” rather than wanting to “get one over the taxman”.

NB: us data from NoE survey when available w/c 20 July. Many people say they trust their sources of cheap tobacco – for instance, it’s a mate or member of the family who’s doing them a favour by letting them have some duty frees. They need to realise that if it’s cheap it’s almost certainly illicit. For instance, the minimum tax on a pack of 20 cigarettes is £3.64[1], and £7.15 for a 50 gram pouch of hand-rolling tobacco. Any packs sold at less than this price are highly unlikely to be duty-paid^[2].

• Fiscal Marks - all cigarettes and hand-rolling tobacco sold in the UK must bear the ‘UK DUTY PAID’ fiscal mark. In the absence of the fiscal mark, the tobacco products cannot be UK duty paid and are therefore liable to forfeiture. All packs of genuine cigarettes and hand-rolling tobacco bearing the UK DUTY PAID fiscal mark now incorporate a covert security mark, which can be tested by HMRC and trading standards officers.
• Health warnings – all tobacco products sold in the UK must bear the correct health warnings. From October 2009 every cigarette pack sold in the UK must contain a picture health warning, and from October 2010 all other tobacco products must contain such a warning.
• Underage sales - it is an offence to sell tobacco products to anyone under the age of 18 years old. Illicit tobacco sellers do not care about who they sell to, and they will often violate age of sale restrictions.
• Tobacco sellers - there are no general restrictions on who can sell tobacco products, nor any restrictions on where tobacco products can be sold from[1].   However, anyone who sells tobacco products must comply with the above requirements.

People travelling from the EU[1] t o the UK are entitled to bring in tobacco products without payment of UK duty, provided they are for their own personal use and are transported by them.  These products can be identified by the absence of the fiscal mark. It is therefore not an offence to be in possession of cigarettes and hand-rolling tobacco that do not bear the fiscal mark. However if they are for resale, including any payment in kind, they are regarded as being for a commercial purposes and liable to forfeiture
 

Those found guilty of dealing in smuggled illicit tobacco could face up to seven years in prison, fines, confiscation of the illicit products and seizure of the proceeds of their crime. The sale of counterfeit tobacco products contravenes both the Trade Marks Act (intellectual property crime) and the Tobacco Products Duties Act (Customs offence). Counterfeit tobacco products may also contravene the health warning requirements to declare the correct levels of tar, nicotine and carbon monoxide. If people want to report suspicious trading of cigarettes or hand rolling tobacco they can use the Customs hotline number 0800 595000 or log onto www.hmrc.gov.uk/customs-hotline

A recent survey for Trading Standards North West showed that illicit tobacco is a significant source for young people. Nearly 14,000 14 to 17 year olds completed the questionnaire and of these 22% said they were smokers.

 When asked about their buying habits:

·        Nearly one in five (19%) bought from street sellers, vans, neighbours or private houses

·        60% had bought packs of cigarettes with health warnings in a foreign language

·        Up to 50% said they had bought fake cigarettes

·        There had been a significant fall since a similar survey in 2007 in the numbers saying they bought from off-licences and newsagents. This was attributed to the introduction of the law banning sales to the under 18s. However, those surveyed still cited such shops as one of their main sources of tobacco  

Yes there is. A survey carried out for Smokefree North West in 2008 showed that four out of five (79%) of respondents supported “a crackdown on tobacco smuggling”. Of smokers who took part in the survey two thirds (66%) supported tougher measures.

No.  Higher income countries, where cigarettes are more expensive, have lower levels of cigarette smuggling than lower income countries.  Other factors, including the presence of informal distribution networks, organised crime and corruption probably contribute more to cigarette smuggling than price levels.  There is more information in this paper.