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Jul 27, 2007

Local producer says contraband efforts not enough

Story PictureWhile armed robbery is one downside of operating a business these days, across the country, companies are complaining about another reality: contraband. While customs officials have tried to cut down the illegal trading, business on the black market is booming. Today, one local producer stepped forward to highlight the impact contraband has had on its operations.

Gregory Gibson, Comptroller of Customs [January 23, 2007]
“Primarily, contraband takes place in the hot bed behind the Orange Walk river, bordering with the Mexico in the north, in Corozal, the Consejo areas, and those areas can be very dangerous. We also recognise that drugs may be moving in those areas.”

Janelle Chanona, Reporting
The government’s fight to erase trade on the black market has had some success, but many in the business community maintain there is still a long way to go.

Kevin Herrera, Belize Chamber of Commerce [January 23, 2007]
“Millions of dollars are being lost to legitimate businesses each year because of things that are illegally coming into the country. This means not only a loss of profits and revenues to businesses, but also major losses to government, to your department in terms of its collections.”

It is believed that the items most often being smuggled into the country are liquor and cigarettes.

Chuck Woods, General Manager, Caribbean Tobacco
“Since 2005, we’ve lost about forty percent of our market directly to contraband, so that’s a significant cut in our market share. We’ve had to really adapt to that new reality to try and just survive now.”

According to Caribbean Tobacco’s General Manager, Chuck Woods, because of contraband the company has had to halve its production and downsize staff.

Chuck Woods
“The problem is that contraband, cigarettes in particular, is huge business. We’re talking about ten million Belize dollars a year in contraband trade, in cigarettes only. It’s a huge loss to government revenue; that represents roughly about four million between Import and Sales taxes. Also, it represents loss of jobs for Belizeans because in our case as we said earlier, we’ve had to take some measures to survive. January for example, we downsized our operation by thirty percent, so that was a significant cut and today we are still overstaffed because the contraband continues to grow and while customs has been making some progress, like I said, it’s really a drop in the bucket considering the big picture. What really needs to be done is it needs to be addressed economically. What started the contraband was the over three hundred and fifty percent rise in excise tax, which is a consumer tax for cigarette smokers primarily and what that did was, it didn’t stop people from smoking or slow down people from smoking, what it did was it created a door for contraband to come in, so people now are smoking contraband cigarettes as opposed to our cigarettes. So the battle needs to be where we look at reducing the excise taxes to take away the financial incentives for the contrabandists. That along with customs efforts I believe will make a huge impact.”

C.T.C. is supporting efforts that would see a reduction in the excise tax charged on cigarettes. In the meantime, the Customs continues to focus on enforcement. In January, Comptroller Gregory Gibson maintained that…

Gregory Gibson
“We have made inroads into this fight and in 2006 we opened our first station in Orange Walk to deal with that. In 2007, we propose to open a station specifically in Corozal to deal with contraband, so we are kicking up our enforcement efforts as much as our resources can come up with.”

In August 2005, the Belize Chamber of Commerce formed an Anti-Contraband committee to support the Customs Department, lobby with government officials, and educate Belizeans on the far reaching effects of the black market. Reporting for News Five, I am Janelle Chanona

The rise in excise tax took effect in July 2005. In 2006, even after cutting production in half, C.T.C. sold approximately sixty-five million sticks of cigarettes under four brands. According to Woods, most contraband cigarettes are traced to China and Mexico.

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