• Costa Rica Real Estate

Is Costa Rica’s anti-tobacco law encouraging smuggling?

June 25, 2014

Two years after Costa Rica passed an aggressive national anti-smoking law, the number of illegal smokes seized by law enforcement has skyrocketed by 89 percent, according to figures from the Finance Ministry.

Some might point to the law’s tax increase as a driver for contraband and tax evasion on tobacco products, but Fiscal Control Police (PCF) Director Luis Álvaro Bonilla says better police work has more to do with the record-breaking seizures.

“What’s changed is our ability to detect irregularities, both contraband and customs fraud,” Bonilla told The Tico Times in a telephone interview. “During the last four years, we’ve developed better ways of working. We’re more focused on organizations [that import illegal cigarettes] and their distribution networks,” he said.

“On a large scale, it’s a very profitable business. It’s a vice permitted by the law. Any drug is profitable, be it legal or illicit,” he added.

The director said that the law has had little, if any impact on the quantities of illegal cigarettes entering the country. He acknowledged that contraband cigarettes might account for a small portion of the drop in sales of tobacco products since the law’s introduction, but doubted it significantly impacts the illicit trade.

Bonilla said that the new focus on the supply side of the problem has resulted in larger seizures. He noted that in 2013, the PCF confiscated over 21 million cigarettes, but they have already seized some 14 million in the first two months of this year.

The PCF director added that the logistical infrastructure of criminal organizations is cause for concern. Bonilla said that criminal organizations that specialize in falsifying import invoices or smuggling cigarettes can become a risk for the movement of other illegal substances across the border, as they offer their transportation networks to other criminal groups.

“Price is what makes [smuggling cigarettes] attractive,” Bonilla said, explaining that the market for these products was often marginalized or rural communities where habit smokers without means are pushed to cheap, perhaps illegal tobacco.

“Anyone paying anything under ₡700 [$1.40] per pack of cigarettes should think there’s something up,” Bonilla said. Much of the illegal tobacco originates in Eastern Europe, China, Panama and Canada, he said.

He said that low quality, off-brand cigarettes were the most common smuggled into Costa Rica. These cheap smokes often lack quality controls and officials have found rat droppings, mold and other items besides tobacco inside.

“[Contraband cigarettes] don’t only put the state’s financial interests at risk, it becomes a public health concern,” he said. “If smoking tobacco is already bad for your health, smoking low quality cigarettes is even worse.”

Bonilla said that tips from the public are essential to breaking up the criminal organizations. Individuals can share tips anonymously by sending an email to pcfdenuncias@hacienda.go.cr or calling (506) 2539-6800.

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