Cigarette Smuggling in Costa Rica on the Rise

From: Costa Rica Star

Posted by Jaime Lopez

Approximately 800,000 smuggled tobacco cigarettes are smoked in Costa Rica every day, an estimate that represents a 19 percent increase over the previous year.

To get an idea of this quantity and its impact, imagine that a shipping container completely filled with packs of smuggled cigarettes enters Costa Rica every two weeks, with the caveat that the government and the people do not enjoy revenue from the taxes imposed on these products by the Tobacco Control Law of 2012 (law number 9028).

The smuggling figures above were compiled by global market research firm Euromonitor and disseminated by representatives of the tobacco industry in Costa Rica. When the Tobacco Control Law was making its rounds in the National Assembly, opposition to its passing was minimal as this is a public health matter; but, now that the law has been implemented for more than a year, certain groups are pointing out flaws and thinking about reform.

The British American Tobacco and the Costa Rican Tobacco companies are among those asking the National Assembly to review the law with regard to clarity of intent. The two tobacco producers, along with the National Chamber of Retail Merchants (CANACODEA in Spanish) are worried that a black market for tobacco products in Costa Rica will only lead to involvement by organized crime and maybe even violence.

Cigarette smuggling is a lucrative business in countries where tobacco products are subject to high rates of taxation. According to a recent report by CNN Money, a smuggler in the United States can net almost two million dollars by purchasing a truckload of cigarettes in Virginia and selling it in New York. The problem is that the opportunity to net such profits is often followed by theft, counterfeiting and violence.

Native Canadians have been unfairly blamed for violence in the cigarette smuggling trade in Cornwall, Ontario. Investigations by the Royal Canadian Mounted Police have revealed ties to organized crime groups in New York, where smokers often seek “Canadian cigarettes” that are actually made in the U.S. and sold to smugglers, only to be sold right back to smokers in New York who pay no taxes.

According to a corporate representative of Costa Rican Tobacco, Panama is a good example of what could happen here as the Tobacco Control Law matures. Four years ago, prohibitions on smoking and increased taxes on tobacco products were introduced in Panama. Back then, smuggling represented only 20 percent of the total market; these days it is 80 percent.


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