T&T continues to lose millions annually due to illicit trade, and despite Government’s efforts to tackle this scourge, there still remains lack of enforcement and porous borders which facilitate the nefarious activity.
Further, it distorts competition in the marketplace, as compliant business are rendered impotent to compete.
This from chief executive officer (CEO) of the T&T Chamber of Industry and Commerce, Gabriel Faria, who was among several speakers at a webinar titled– Tackling Illicit Trade in T&T– hosted by the British High Commission yesterday.
“One of the things I consider up to now, is a low political will to intervene,” Faria said, adding that illicit trade is also easy to conduct due to “low barriers to entry as any one can do it.”
Penalties, he added, is another major issue which must be effectively and efficiently addressed.
Noting that profit is the main driver of illicit trade, Faria referenced alcoholic beverages.
“Imagine one container of product has duties and excise of a million dollars.
“Imagine someone taking one container of product and being able to save a million dollars. That’s because of our very high duties on product,” Faria said, advising that it is critical for the current level of taxation applied on spirits be reviewed.
According to Faria, about 22 per cent of spirits are illegally imported but in some products it’s as much as 50 per cent, mainly because it’s not across every brand.
There are certain brands, he said, which are more susceptible to trade.
“And what this does is it impacts the legal or compliant importer because they are now faced with people bringing in these products and under selling them because they are not paying the full duties,” Faria explained.
Illicit trade also breeds corruption and Faria emphasised that it’s important T&T has stronger laws and implement more punitive measures.
“We have to make sure that when someone is caught we take action.
“We must have stronger investigations and we must pursue the wrongdoers,” he added.
Further, illicit pharmaceuticals, Faria identified, are also worrying.
He said when these counterfeit drugs are brought in, proper standards of distribution are not followed, leaving the consumer at great risk which can in some instances result in loss of life.
“They are not following proper protocols in terms of transportation, they are not storing the products properly and that’s a major issue,” Faria added.
It was only recently that two pharmacists had been jailed in England for illegally supplying prescription sleeping pill Zolpidem valued at £600,000 to a mystery buyer in this country.
British media reported that Dean Dookhan, 40, and Narvinder Nandra, 48, used their businesses as a cover to wholesale more than 20,000 packets of Zolpidem to a mystery figure in T&T for a profit.
Undoubtedly, the treat of illicit trade continues to cripple compliant business in T&T.
According to Faria, this has often resulted in a reduction of staff and market share, while at the same time, creating a sector of errant traders.
“The noncompliant business do not pay NIS, the employees do not pay PAYE, so this has a rippling effect across the system.
“It also means there may be reputational damage to a brand, the importer and strained relationships with the ,regulatory authorities,” Faria said, adding that these issues in turn, penalise compliant businesses.
He, however, commended the Government and the Trade Ministry for taking steps in the right direction to combat illicit trade, most recently with the setting up of an Anti-Illicit Trade Task Force.
At a press conference in March this year, Trade Minister Paula Gopee-Scoon said figures submitted to the Ministry of Trade estimate that losses due to tax evasion from illicit trade may be as high as $91 million for tobacco and alcohol alone for 2019 and 2020.
She referred to figures given to the ministry by the Chamber of Industry and Commerce and the West Indian Tobacco Company (Witco).
Witco estimated $30 million lost to tax evasion from illicit trade for tobacco in 2020.
This included excise duties, value added tax (VAT), corporate tax, and Green Fund tax, none of which would have been applied to illicit goods.
The T&T Chamber also estimated $61 million in losses due to illegal imports in 2019.