European Commission sides with tobacco smugglers against UK Customs



Wednesday 24 October 2001

ASH release

Immediate 24 October 2001

 

European Commission sides with tobacco smugglers against UK Customs

 

ASH condemned the move by the European Commission to challenge the efforts of UK Customs to control the scourge of bootlegging [1]as “another case of free-trade zealots trying undermine public health policy”and offered a scathing explanation of the Commission’s motives.

 

The European Commission has announced it is investigating UK Customs for inhibiting free movement within the EU -because of the action they are taking against cross-Channel smuggling. British travellers can shop in Belgium or France and bring back as much tobacco as they like – as long as it is for personal use, and not to be sold evading taxes.  There are guidelines that for 800 cigarettes or less no questions will be asked.  For more than 800, the traveller has the burden of proof to show these are for personal use.  Following complaints, the Commission accuses HM Customs of being to strict in implementing these guidelines.

 

Clive Bates, Director of ASH, said:

 

“The freedom to go shopping for cigs in Belgium is hardly a fundamental human right, especially when it really opens the door to bootleggers and petty criminals.”

 

“People should know that if they go over to warehouses on the continent and buy thousands of cigarettes they easily risk being mistaken as smugglers.  In fact, in most cases they are smugglers.

 

“High tobacco taxes help to reduce demand and save lives.  Smugglers can undermine good health and tax policy, but shouldn’t be assisted by the European Commission.

 

“This is one way the European Commission can gain control of tax policy and yet more power.  If Britain can’t prevent smuggling, then it can’t set it’s own tax rates.  We think that the weakening of border controls is part of a wider Commission attempt to gain de facto jurisdiction over taxation. “This sort of interference from the Commission is another example of free-trade being put before health and welfare.

 

Following the initial threat of legal action by the European Commission in August, ASH wrote to the internal market Commissioner, Frits Bolkestein, pointing out that the complaints to were almost certainly an orchestrated campaign to undermine Customs controls [2] and make life easier for bootleggers.  We pointed out that:

 

…some £1.36 billion pounds of tobacco excise duties were evaded in 2000 through cross-Channel bootlegging of cigarettes and hand rolling tobacco – an increase of 38% over the previous year.  This represents a large and lucrative criminal trade, which HM Customs has finally begun to tackle.  This compares to an estimated £220 million in legitimate cross-border shopping – the illegal trade cross-Channel being some six times greater than legitimate. [3]

 

[1] HM Customs anti-smuggling strategy

[2] Letter to Bolkestein 9th August 2001

[3] Figures from Dawn Primarolo MP. Parliamentary answer 7 March 2001 Hansard col 230W – see below

 

Contact: Clive Bates 020 7739 5902 (work).   077 6879 1237 (mobile)  (ISDN available)

Tobacco smuggling and cross border shopping in the UK

 Parliamentary answer 7 March 2001

 

Table 1: Revenue lost through all forms of tobacco smuggling

£ million(6)
1999 2000
Cross-Channel smuggling of:
Hand rolling tobacco 670 890
Cigarettes and other tobacco 320 470
Total cross-Channel smuggling of tobacco 985 1,360
Tobacco smuggling by air passengers, internet and parcel 110 120
Freight smuggling of cigarettes 1,600 2,300
Assessment of all forms of tobacco smuggling and evasion(9),(10) 2,700 3,800

 

 

Table 2: Revenue lost through cross-border shopping of EU duty paid tobacco

£ million

Product type

1998 1999
Cigarettes and other tobacco products n/a 185
Hand-rolling tobacco n/a 35
Total 85 220

 

The increase in the cross-border shopping estimates between 1998 and 1999 reflects the effects of the abolition of intra-EU duty free sale in July 1999. Prior to abolition duty free sales were not included in the estimates of cross-border shopping; from July 1999 onwards duty free sales have largely been replaced by EU duty paid sales, which are included in cross-border shopping. Because the switch from duty free sales to EU duty paid sales does not involve an additional revenue loss, the measured increase in cross-border shopping between 1998 and 1999 overstates the net additional loss of revenue.