Ammon News - AMMONNEWS - About six months ago, Mohammed (a pseudonym) was managing to smuggle 40 cartons of cigarettes (400 packs, 8,000 cigarettes) in small batches every month from Jordan into Palestine, where he sold them for a net profit of $1,000.
“There is increasing demand for smuggled cigarettes, given their low price, compared to the price of cigarettes on the Palestinian market,” Mohammed, who refused to reveal his real name for fear of reprisal, told Al-Monitor.
About his smuggling techniques, he said, “I ask some women or elderly men to help me bring cigarettes from Jordan, as each person is allowed up to 20 packs. I also unpack cartons and hide more packs under clothes in my bag.”
People arriving in Palestine through the Jordan-Palestine route are allowed only 20 packs (two cartons, 200 cigarettes). Any additional packs are confiscated by customs. The price of imported cigarettes — including Marlboro, Kent, L&M — in Jordan or at the Jordanian duty-free area ranges from $5.50 to $6.50 per pack, while cigarettes made in Jordan are purchased for $2.50 and sold for $4 on the Palestinian market. Meanwhile, locally produced cigarettes in Palestine — such as Imperial, Wissam and Jamal — cost $5 to $5.50.
Mohammed Rabih, assistant to the director general of Palestinian Customs, told Al-Monitor, “Every arriving traveler is allowed 20 packs of cigarettes, but some are smuggling packs for business [profit] purposes. Women mostly are the ones who are carrying out the smuggling. Big quantities of smuggled cigarettes are being seized every day. However, larger quantities are being smuggled in ways beyond our control.”
He added, “After checking in on the Jordanian side, travelers buy cigarettes and flavored tobacco from the duty-free [shops]. Upon arrival to the Israeli side, they place the cigarettes in a taxi with an Israeli plate and agree with the driver to deliver them on Route 90 in Area C, where the Palestinian Authority [PA] has no power, in exchange for a certain amount of money.”
Rabih also talked about other methods of smuggling, “such as wrapping cigarettes against one’s body, which is done by women mostly.”
“Other smugglers wrap them in such a way to make them look like foodstuffs or place them inside clothes or bags. However, the quantities that are smuggled are much bigger than those we manage to confiscate.”
The smuggling is costing the PA treasury, which greatly depends on tobacco revenues. This is why the PA and the Ministry of Finance are banning cigarettes that are not being subjected to customs duties.
According to a 2014 study by Alpha International in Ramallah, 39.4% of cigarettes on the Palestinian market are smuggled and do not meet legal specifications, such as health screening or warning messages, and are not subject to customs duties.
The same study estimates the number of cigarette packs sold illegally in the West Bank at 45 million annually, costing the state treasury $100 million to $105 million in lost revenues.
Louay Hanash, director general of Palestinian Customs, told Al-Monitor, “We are seeking to solve this problem by making arrangements to determine the number of packs sold to every passenger in Jordan, especially since the smuggling is being carried out in large quantities on Route 90.”
He added, “We are trying to control the market and track down smugglers. We have seized 2.8 million cigarettes since the beginning of the year. But the [number of] uncaught smuggled cigarettes remains much greater.”
Tobacco revenues are seen as essential income for the public treasury. “The tariffs on imported and local tobacco are the most important revenues for the public treasury, with a contribution of 200 million shekels [$51 million] annually. The minimum tariff on a single cigarette pack is 16 shekels [$4.20],” he added.
Cigarette smuggling and the increased demand for local and “al-Arabi” tobacco are cutting into sales at the licensed Jerusalem Cigarette Company (JCC). Mustafa al-Ilmi, JCC production manager, told Al-Monitor production began declining in 2013, and today is only about 80% of what it used to be — costing JCC an estimated $750,000 last year.
For his part, Nasr Abdel Karim, a professor of economics at Birzeit University, told Al-Monitor, “It is difficult to estimate the number of smuggled cigarettes, as what is being seized is only 10% of the contraband quantities, which have turned into some sort of clandestine business.”
He added, “Contraband includes cigarettes, flavored tobacco and milk, given the different customs duties between Palestine and Jordan, which is causing losses to the [Palestinian] public treasury and adversely affecting the local industries."
Palestinians are smuggling cigarettes and consuming locally produced al-Arabi tobacco, as they cannot afford imported, taxed cigarettes, while the government remains unable to regulate this market and to provide cheaper cigarettes for its citizens.
*Al-Monitor
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