Coronavirus Yet to Halt Peru’s Contraband Cigarette Trade

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Police in Peru have recently seized large quantities of contraband cigarettes in one of the capital’s most populous districts, in the latest reflection of the regional boom in demand for black market tobacco amid the coronavirus pandemic.

On October 6, Customs police seized more than 1.5 million illicit cigarettes during two simultaneous operations in the La Victoria district of the capital, Lima. Peruvian customs agents (Superintendencia Nacional de Aduanas y de Administración Tributaria — SUNAT) valued the merchandise at 1.8 million soles (around $500,000), Perú 21 reported.

The seizure comes amid a string of operations targeting the South American nation’s bustling contraband cigarette trade.

SEE ALSO: Peru News and Profile

A week earlier, the criminal investigation unit of the national police seized more than 70,000 illicit cigarettes from a local shop in northwest Sullana province. The cigarettes did not have documentation proving its origins, but authorities believe they arrived from Colombia or Paraguay, according to local media reports.

Prior to that bust, in early September, police confiscated around 36,000 cigarettes from five individuals traveling on an interprovincial bus between Piura and Talara in the north of the country. Officials told local media they suspected the cigarettes entered Peru from Bolivia and transited through the city of Puno en route to Piura.

InSight Crime Analysis

The seemingly steady flow of contraband cigarettes into Peru and the continued efforts of law enforcement to intercept them suggests that the coronavirus has done little to slow this thriving illicit market.

Indeed, over the last eight years, the national government has lost some $5 billion in revenue to the country’s contraband trade — primarily cigarettes, according to a report last year from the anti-contraband committee of Peru’s National Society of Industries (Sociedad Nacional de Industrias — SNI).

In 2018, the SNI found that 43 percent of Peru’s contraband cigarettes came from Paraguay, which has long been a key supplier of such products aided in part by official corruption. The black market products often enter through the country’s main seaport of Callao along the Pacific coast, but are also smuggled through the border regions with Ecuador, Bolivia and Colombia, according to the SNI.

SEE ALSO: Coverage of Contraband

In recent years, the Peruvian government has hiked taxes on products like cigarettes and motor vehicles that officials argue have the most adverse health and environmental effects.

At the time of the increase in 2018, the SNI warned it could lead to an uptick in contraband smuggling. In neighboring Bolivia, for example, the consumption tax applied to cigarettes is 75 percent lower than in Peru, which gives smugglers a key incentive to facilitate the illicit trade, according to data from Euromonitor cited by the SNI.

And Peru is far from the only country in Latin America struggling to curtail this booming illicit trade, made all the more attractive by relatively low risks and high returns.

Smugglers in Argentina have turned to black market cigarettes amid a shortage of cigarettes and job losses brought on by the pandemic. To the north, in Ecuador, authorities are seeing a surge in contraband smuggling due to the coronavirus. Between January and August of this year, customs officials seized four times the amount of contraband products confiscated during the same period of 2019, according to El Comercio.

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