HomeNewsBriefIllegal Cigarettes Increasing Presence in Brazil and Southern Cone
BRIEF

Illegal Cigarettes Increasing Presence in Brazil and Southern Cone

BRAZIL / 3 JUL 2019 BY YURI NEVES EN

Argentina, Chile and Brazil are struggling with increased demand for smuggled cigarettes, as these provide major revenue for criminal groups and result in massive tax losses for national governments.

Contraband cigarettes now represent more than half the cigarettes for sale in Brazil, 24 percent in Chile and 12 percent in Argentina, according to the Anti-Contraband Association of Latin America (Asociación Latinoamericana Anticontrabando – ALAC).

In Argentina, the number of illegal cigarettes seized by authorities jumped to some 1.2 million packs in 2018, up from about 250,000 in 2017, an increase of 245 percent, Clarín reported. Contraband cigarettes cost the Argentine government 8.5 billion pesos (about $200 million) in lost taxes in 2017. The majority of cigarette seizures occurred in major smuggling hotspots such as Formosa, a city on the Paraguay-Argentina border, and the Triple Border Area where Paraguay, Argentina and Brazil meet.

SEE ALSO: Argentina News and Profiles 

Between 2015 to 2018,  the illicit cigarette market in the state of Rio has more than doubled and 90 different brands are now illegally imported into the country. The loss of tax revenue for 2018 is estimated to have reached 11.5 billion reais (about $3 billion), surpassing the amount of taxes collected from the legal sale of cigarettes.

InSight Crime Analysis

The expansion of the black market for cigarettes poses a greater threat to the Southern Cone and neighboring Brazil than tax losses alone, as powerful criminal groups tap into the trade as a source of revenue.

Paraguay cigarette production spurs much of the black-market trade. The country produces some 65 billion cigarettes a year, but only consumes only some 2.5 billion, according to a 2013 study by the International Tax and Investment Center. The majority are smuggled to countries with much higher taxes on cigarettes, undercutting legal competitors. Nearly three-quarters of illicit cigarettes in 16 Latin American countries originated in Paraguay, Foreign Affairs reported.

Former Paraguay President Horacio Cartes has been at the center of the illegal cigarette trade in Latin America and beyond. His family’s company, Tabacalera Del Este, is one of the main sources of smuggled tobacco, representing half of all illegal cigarettes sold in Brazil.

SEE ALSO: Arrests Again Point to Paraguay President’s Contraband Cigarettes 

The two most popular cigarette brands in Brazil are brands smuggled from Paraguay.

Besides, the smuggling routes in the Tri-Border Area are controlled by groups that include powerful Brazil prison gangs. Federal police say both the First Capital Command (Primeiro Comando da Capital – PCC) and the Red Command (Comando Vermelho – CV) have used proceeds from illegal cigarette sales to buy weapons and ammunition, O Globo reported.

Last year, Brazilian police dismantled a smuggling ring that imported cigarettes among other contraband on the Paraguayan border. This successful operation only created a vacuum in the market that the PCC stepped in to fill. The PCC now controls the Southern Cone’s main cigarette smuggling route, which originates in Ponta Porã in the Brazilian state of Mato Grosso do Sul that borders Paraguay. From January to September last year, some $71 million worth of illegal cigarettes were seized in this region, according to O Globo.

As long as Paraguay is able to supply cheap cigarettes and consumers in the region are willing to buy them, criminal groups will seize the opportunity to increase their profits, while national governments continue to lose taxes.

Compartir icon icon icon

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Related Content

EPP / 19 AUG 2013

Five security guards have been kidnapped and murdered on a cattle ranch in north-central Paraguay, allegedly by members of the…

ARGENTINA / 8 DEC 2020

New details have emerged about the sophisticated criminal operations of a Red Command leader who once operated in the Argentina-Brazil…

BRAZIL / 20 FEB 2021

Drug traffickers engage in a creative game of hide and seek with coast guards and other security forces that board…

About InSight Crime

THE ORGANIZATION

We Have Updated Our Website

4 FEB 2021

Welcome to our new home page. We have revamped the site to create a better display and reader experience.

THE ORGANIZATION

InSight Crime Events – Border Crime: The Northern Triangle and Tri-Border Area

ARGENTINA / 25 JAN 2021

Through several rounds of extensive field investigations, our researchers have analyzed and mapped out the main illicit economies and criminal groups present in 39 border departments spread across the six countries of study – the Northern Triangle trio of Guatemala, Honduras, and El…

BRIEF

InSight Crime’s ‘Memo Fantasma’ Investigation Wins Simón Bolívar National Journalism Prize

COLOMBIA / 20 NOV 2020

The staff at InSight Crime was awarded the prestigious Simón Bolívar national journalism prize in Colombia for its two-year investigation into the drug trafficker known as “Memo Fantasma,” which was…

ANALYSIS

InSight Crime – From Uncovering Organized Crime to Finding What Works

COLOMBIA / 12 NOV 2020

This project began 10 years ago as an effort to address a problem: the lack of daily coverage, investigative stories and analysis of organized crime in the Americas. …

ANALYSIS

InSight Crime – Ten Years of Investigating Organized Crime in the Americas

FEATURED / 2 NOV 2020

In early 2009, Steven Dudley was in Medellín, Colombia. His assignment: speak to a jailed paramilitary leader in the Itagui prison, just south of the city. Following his interview inside…