Nazim warns of rampant growth in illicit tobacco trade; sharp decline in import duty

The decision by the government to increase import duty on cigarettes and ban vapes and e-cigarettes, while well-intended, has resulted in rampant growth of smuggling of cigarettes and vapes, says Deputy Speaker Ahmed Nazim.

Nazim, who sits in the Parliament’s Security Services Committee, made the remark after presenting a report prepared by the committee on an inquiry into Customs.

The Dhiggaru representative said the government had good intentions when it banned vapes and e-cigarettes and doubled the import duty on cigarettes.

But he said that the Maldives has also seen a rampant growth in smuggling of cigarettes and vapes, and a sharp decline in earnings from import duty since then.

“We banned it out of very good intentions. But there’s cigarettes being smuggled in. The quantity of smuggled cigarettes is higher than the quantity of cigarettes that are imported legally, by paying import duty. It’s the same with the vape business. There are social media groups selling vapes,” he said.

Nazim said that all these cigarettes are being smuggled in under Custom’s watch.

The committee recommended Customs take measures to address the issues uncovered in its inquiry. This includes:

• Formulating stronger policies to execute Customs’ duties, and presenting a plan with a clear timeline to the committee
• Taking measures to rectify the issues highlighted in the committee’s report
• Revising regulations to mandate asset declarations of Customs officials and their spouses and children under the age of 18

“This is having a direct impact on the state’s revenue. The tax money and revenue that should be going into the state is being taken by someone else,” said Nazim.