Hong Kong customs crackdown nets HK$563 million worth of illegal cigarettes after tobacco tax increase
- Part of Operation Tempest took place after finance chief announced tobacco tax increase in February
- ‘We have noticed syndicates have used subdivided flats, flats or even public housing units as storerooms,’ customs says
Hong Kong customs officers have seized untaxed cigarettes worth HK$563 million (US$72.1 million) during a 2½-month illegal trade crackdown, coinciding with a tobacco tax increase in February.
Assistant Commissioner Barry Lai Chi-wing said officers clamped down on the post-pandemic trend of smuggling the contraband into the city in small portions from February 19 to May 14 in an operation code-named “Tempest”.
“As the city returns to normality, more passengers will come in and out of Hong Kong. At this point, piecemeal transfers will return as illicit cigarettes get smuggled in with small amounts, finding local storage spots afterwards,” Lai said.
Part of the operation also took place after Financial Secretary Paul Chan Mo-po announced in this year’s budget that the tobacco tax would be raised by 80 HK cents per stick with immediate effect.
The increase raised the average cost of a pack of 20 cigarettes by HK$16 to more than HK$90. A pack costs HK$19 to HK$38 on the black market.
A total of 4,347 people, aged between 15 to 89, were arrested during the operation, with officers confiscating 139 million sticks of suspected illicit cigarettes, 105kg of cigars and around 1,525kg of manufactured tobacco products, with a market value of HK$625 million. The tax take would have been about HK$454 million.
The operation covered the import, storage, distribution and retail sales of illicit cigarettes.
Contraband worth HK$563 million was seized after the tax increase, while 87 per cent of those held were apprehended under the new levy law.
Customs officers arrested 538 people and seized HK$62 million worth of illegal tobacco products in the first 10 days of the operation, when the budget was announced.
Lai said officers usually did not prosecute inbound passengers who brought cigarettes over the allowable limit to ensure efficient law enforcement.
Officers rather issued a HK$2,000 fine and charged passengers five times the applicable tax for the amount of cigarettes they brought, he added.
But the assistant commissioner said customs would seek to raise the fixed fine, as more than 5,000 passengers had been fined over the first four months of the year.
Inbound passengers aged 18 or above are allowed to bring 19 cigarettes, one cigar or 25 grams of manufactured tobacco into Hong Kong tax-free for personal use.
Jeff Lau Leung-chi, deputy head of the customs’ revenue crimes investigation bureau, said officers had noticed in the operation that apart from sheds and village houses in remote locations in New Territories, various types of flats in urban areas had also been used for storage.
“We have noticed syndicates have used subdivided flats, flats or even public housing units as storerooms. They are trying to use the dense environment as cover to evade customs detection,” Lau said.
On May 9, officers arrested a 67-year-old woman in Tai Po for carrying 2,000 suspected illegal cigarettes. A check at her home in the district uncovered a further 30,000 suspected illegal sticks.
Another 390,000 alleged illegal sticks of cigarettes were later found in another flat in the same private residential estate.
Officers also found more than 180,000 suspected illicit cigarettes hidden in two subdivided flats in Sham Shui Po after arresting a 60-year-old woman for carrying the same contraband, while 7,000 sticks of suspected illegal cigarettes were found in a public housing flat under the woman’s name.
But Lau said there had been no sign of elderly residents being exploited by smuggling syndicates to store illicit cigarettes in their residences in the arrests.
