Does Shaw's Tax Policy Enable Cigarette Smugglers? Carreras Says It Might

Company revenue fell seven per cent to J$3.47 billion in the quarter ending December 2010, while net profit dropped 16 per cent, from J$849 million or J$1.75 per share to J$714 million or J$1.47 per share, reflecting both declining sales and a 38 per cent erasure of investment income as yields fell on paper securities.

The cigarette distributor has blamed the contraction in its business on both Finance Minister Audley Shaw's heavy application of excise tax policy, as well as unchecked trading in smuggled and counterfeit brands, but went further in its latest earnings report to infer that one might be serving to facilitate the other.

"The company remains deeply concerned at the impetus and fillip that could be given to the illicit trade in cigarettes if the Government were to continue an excessively high and very frequent approach to the levying of taxes on the industry," said Carreras chairman Christopher Burton.

"Our volumes will continue to be challenged going forward," he said.

The company's new boss, managing director Richard Pandohie, said Wednesday that Carreras is losing market share to illicit traders at a faster rate now, after two tax hikes since 2009. He said 40 per cent of Carreras' business has been captured over three years, 26 per cent, in the last year alone.

"Tax policy, in isolation, is helping to drive illicit business," he said. "We are asking Minister Shaw to relook his strategy."

Meanwhile, in a touch of irony, while Carreras' various obligations to the Treasury hit J$9 billion last year, it is yet to collect on the J$1.73 billion that the courts ordered returned to the company in February 2010, in reversal of a previous judgement handed down against its manufacturing subsidiary Cigarette Company of Jamaica, which is being wound up.

The company said it is yet to even receive an acknowledgement of its claims for refund.

The tax authorities are appealing the ruling.

Carreras, in the past two quarters, has stepped up its criticism of Government, saying it was concerned about the sustainability of its operation in the face of a mounting multibillion tax bill. Pandohie later said, when asked to clarify the company's position, that Carreras was not considering and had no intentions of pulling from the Jamaican market.

Mounties seize illegal cigarettes

Two Nova Scotia men are facing charges after Mounties seized more than 120,000 contraband cigarettes from their car.

Police officers pulled the car over Wednesday on the Trans-Canada Highway in Saint-André, near Grand Falls.

Besides the cigarettes, police also seized the 2003 Nissan Altima that the illegal tobacco was found in and are seeking forfeiture to the Crown.

The two men, aged 38 and 41 years old, whose names haven't been made public, were released.

They are to appear in court at a later date.

Former Owner of National Cigarette Retailer Convicted of Bank Fraud

A former owner and officer of Cigarettes Cheaper!, which at its height had nearly 800 retail stores nationwide and $1 billion in annual revenue, was convicted by a federal jury yesterday of one count of conspiracy to commit bank fraud and to make false statements to Comerica Bank, 13 counts of bank fraud, and 14 counts of false statements to a bank, United States Attorney Melinda Haag announced. The jury found that Ned Roscoe conspired to defraud and make false statements to Comerica Bank, committed 13 acts of bank fraud, and made 13 false statements to Comerica Bank when, in the fall of 2003, he knowingly submitted weekly borrowing base reports of inventory with inflated inventory valuations. The jury also found that Roscoe had caused an additional false statement to be made to Comerica Bank when he directed an employee to falsely explain the cause of the inventory inflation. The guilty verdict followed a month-long jury trial before United States District Court Judge Ronald M Whyte.

Co-defendant John Roscoe, also an owner and officer of Cigarettes Cheaper! and Ned Roscoe’s father, pleaded guilty on January 21, 2011, to conspiracy to make false statements to Comerica Bank. John Roscoe, 81, resides in Green Valley, Calif. Evidence at trial showed that Ned Roscoe, 51, of Fairfield, Calif ., directed company accountants from August 22, 2003, through November 14, 2003, to inflate the company’s weekly borrowing base reports of inventory submitted to Comerica Bank, eventually inflating the value of Cigarettes Cheaper!’s inventory by more than $16 million. The evidence showed that Ned Roscoe did this in order to obtain additional money from Comerica through Cigarettes Cheaper!’s $21 million line of credit and to avoid a pay down on the line of credit of $10.7 million.

The evidence also showed that Ned and John Roscoe conspired to defraud Comerica Bank and make false statements to the bank. It further showed that Ned Roscoe directed and caused a company accountant to falsely inform Comerica Bank in late November 2003 that the cause of the $16 million in inflated inventory was due to clerical or accounting errors. Ned and John Roscoe were indicted by a federal grand jury on June 16, 2007. On September 30, 2011, the grand jury returned a second superseding indictment, containing the 28 counts presented to the jury.

The sentencing of Ned Roscoe is scheduled for June 6, 2011, before Judge Whyte in San Jose. No sentencing date has been scheduled for John Roscoe, but one is expected to be set shortly. The maximum statutory penalty for count 1, in violation of 18 United StatesC. § 371, conspiracy to commit bank fraud and to make false statements to a bank, is five years and a fine of $250,000, plus restitution if appropriate.

The maximum statutory penalty for counts 2 through 14, in violation of 18 United StatesC. § 1344, and counts 15 through 28, in violation of 18 United StatesC. § 1014, false statements to a bank, is 30 years as to each count, and a fine of $1 million, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 United StatesC.

§ 3553. Eumi Choi and Grant Fondo are the Assistant United States Attorneys who prosecuted the case with the assistance of Kamille Singh. The prosecution is the result of a three-year investigation by the Federal Bureau of Investigation. The FBI initiated its investigation in 2004 after a referral from Comerica Bank.

Seized cigarettes fuel energy grid

More than four million cigarettes seized from a suspected smuggler at a port have been burned to fuel the National Grid, HM Revenue and Customs (HMRC) has said.
The 4.6 million Lambert and Butler branded cigarettes were found by customs officers in a lorry at Newhaven, East Sussex, after arriving by ferry from Dieppe.
Spanish lorry driver Alain Corominas Pons, 44, was charged with evading £714,000 in duty when the load was allegedly smuggled into the UK in March 2007.
He was remanded in custody when he appeared at Southampton Magistrates' Court on Thursday until his next court appearance on March 3, said HMRC.
A HMRC spokesman said: "The cigarettes have been burned at a power station to fuel the National Grid."
He added that cigarette smuggling costs the UK economy millions of pounds in lost revenue each year, which could be used to fund public services.

GCC countries set for total ban on e-cigarettes

A blanket ban on the import and sale of electronic cigarettes (e-cigarettes) is on the cards in the GCC countries, with a recommendation to this effect by the 70th conference of GCC Health Ministers Council which concluded here yesterday.

A statement issued by the conference underlined the “necessity for imposing a total ban” on e-cigarettes in line with the WHO guidelines and the findings of recent studies on the product.

Anti-smoking activists in the region have been campaigning for a ban on e-cigarettes, which are used as an alternative for traditional cigarettes, on grounds that it is more dangerous to the users compared to the traditional cigarettes.

WHO has disputed claims by producers of e-cigarettes that it helps people quit smoking and has warned of its harmful effects.

The Doha conference also expressed concern over the rising number of women smokers in the Gulf region and called for more efforts to raise awareness on the issue.

The conference urged the member countries to set up national centres for organ donation and transplant and conduct studies on major diseases that lead to kidney failures.

The importance of promoting the culture of organ donation in the region and co-operation between the member countries in donation and transfer of organs was also highlighted. The meeting called on the member countries to provide governmental support and funding to such activities.

The ministers lauded the Doha Declaration on organ donation and the successful Saudi experience in organ transplantation.

Regarding an earlier proposal to unify the prices of imported medicines in the GCC countries, the meeting decided to conduct further studies on the issue and forwarded it to the committee concerned.

The meeting urged member countries to establish a database on all medicines sold in the GCC market. A meeting would be held in Kuwait to discuss this issue. All member countries have been asked to update their database regularly. The ministers approved a five-year strategic plan on nursing aimed at addressing the shortage of qualified nursing professionals in the region. The meeting recommended setting up a specialised Gulf body to promote the nursing profession. The conference called on member countries to implement the concept of pharmacy care in private and public sectors.

The ministers decided to intensify monitoring on the approved medical centres in various Asian and African countries conducting health check ups for workers being recruited to the Gulf countries. The Peninsula

Groups Lobby for Cigarette Tax Increase in Vermont

Anti-tobacco lobbyists in Vermont are pushing the legislature to increase the state’s cigarette tax. The per-pack tax now stands at $2.24 but the group is asking for a $1 hike. The push comes in response to Gov. Peter Shumlin proposed $2.1-million cut in the state’s tobacco control efforts.

According to the Associated Press, the move is three-pronged. The anti-tobacco lobbyists hope the increase would offset budget cuts to anti-tobacco efforts, raise more money for the state and act as a deterrent to smoke.

Joining in the effort are the Coalition for a Tobacco Free Vermont, the American Lung Association, the American Heart Association and the Vermont Low Income Advocacy Council. They contend the proposed increase would raise $10.2 million in new revenue for the state and save millions in healthcare costs, according to the news outlet.

"It is a win-win for everyone," said Tina Zuk, coordinator for Coalition for a Tobacco Free Vermont. "The primary role of the tax is not the revenue, although I think to some that sweetens the deal. Where we’re going is that from a public health perspective, it’s the single best way to get youths not to smoke and to get smokers to quit."

Currently, cigarettes sell for approximately $6.50 a pack in the state. But not all are for an increased levy. The Vermont Grocers’ Association argues that any increase would push smokers to buy cigarettes elsewhere. "No one wants to see increase smoking," said Jim Harrison, president. "We want to see decreases. However, just changing the tax rate, it has other unintended consequences. We’ve seen it time and time again, especially when small geographic states like Vermont increase the rate. It shifts sales to neighboring states, the Internet, Indian reservations."

"We think we’ve decreased [smoking] but we really haven’t, and what we really ended up doing is losing commerce in Vermont, and some of that tax revenue," he added.

And, according to the Associated Press, state Agency of Human Services Secretary Doug Racine agrees. He said that Vermont has collected about $4.9 million more in cigarette tax revenue this fiscal year. The increase is due in part to New Yorkers coming to the state to buy cigarettes. The state cigarette tax in New York is more than $4 per pack.