Brazil is the biggest illicit cigarettemarket in the world and registers percentag-
es four times higher than the average in the global market. Statistical figures pre-
sented in October 2017 in Greece, at the assembly of the International Tobacco
Growers’ Association (TGA), corroborate this information. The numbers show that
contraband cigarettes represent 10.6% (or 583.5 billion pieces), on average, in the
international scenario, estimated at 5.5 trillion cigarettes.
In Brazil, the illicit trade amounts to 45.4%of themarket, or 46.9 billion pieces,
according to estimates by Ibope in a survey conducted in 2016. It means that while
in the entire world only one cigarette in ten is illicit, in Brazil this number reaches
4.5 cigarettes in ten. The State of São Paulo will come to year’s end, in 2017, with
The record
that nobodywants
Brazil is a giant in the consumptionof illicit cigarettes;
the heavy tax burden and the rules harmful to
the sector encourage the strides of the illicit trade
IntheCountry,
illicit cigarettes
represent four times
theglobal average
SELF-GUARANTEED
Entities linked to the fight against piracy refer to
thegovernment’sattitudeasharmfultotheactivity,
societyand to thegovernment itself, asno taxes are
collectedfromtheillicittrade.Thelackofaninspec-
tion structure and a border policy make the fight
against the illicit trade all the more difficult and in-
efficient. AStudy by the Institute for Social andEco-
nomic Development along the Borders (Idesf) indi-
catesthatBrazilhaslostupwardsofR$115billionup
to 2015 and that contraband (or also referred to as
informal cigarettemarket) has turned into a logistic
basisforsuchcrimesasMoneyLaunderinganddrug
trafficking,besidesweaponsfororganizedcrime.
Furthermore, in the illicit cigarettes, risks for
consumers have been identified in light of the
poor quality of the rawmaterial, storage, the pres-
ence of residues and components banned in Bra-
zil,andacompleteabsenceofanysanitarycontrols.
More than 40 thousand jobs have been lost in Bra-
zilbecauseofcigarettesmuggling,upto2017,notto
mentionthe600hundredthousandretailersandto-
baccofarmersaffectedbytheunfaircompetition.
60% of the cigarettes sold in the state coming
from Paraguay or are counterfeit, according to a
survey by Ibope. These sales in São Paulo reflect
the increase in theStateSales Tax (ICMS), back in
2016, from 25% to 32%, on cigarettes manufac-
tured by the national industry.
The initial Paraguayan advantage lies in the
tax burden. The tax burden in the neighboring
country varies from 8% to 16%, and these cig-
arettes pay no taxes in Brazil, as they are smug-
gled into the Country, and sold on every corner
for prices that vary from R$ 2.50 to R$ 3.50. The
Brazilian brands pay taxes of up to 80%, and their
minimumprice is set at R$ 5, besides the full bur-
den of requisites stemming from formality. The
survey conducted by Ibope shows that the de-
cline in the consumption of formal brands is pro-
portional to the steps forward by the illicit trade.
That is to say, when the Brazilian governments
– federal and state – expand the tax burden on
formal cigarettes, they are encouraging the con-
sumption of pirated cigarettes.
57
AVANÇO CLANDESTINO
ILLICIT TRADE
Mercadode cigarros noBrasil (bilhões de unidades)
CIGARETTE MARKET IN BRAZIL (BILLION PIECES)
Ano
Produtos legais Ilegal
Consumo total % ilegal
2010
91,4
22,3
113,7
19,6
2015
63,9
41,7
105,5
39,5
2016
56,4
46,9
103,3
45,4
Variação %
2010 a 2015
-30,1
86,8
-7,2
Variação %
2015 a 2016
-11,7
12,6
-2,1
Fonte: Ibope/PackSwap2017eAfubra.
