SindiTabaco defends the application of the new law against smuggling

The president of the Interstate Tobacco Industry Union (SindiTabaco), Valmor Thesing, participated on Thursday, September 18, at Palácio Piratini, in Porto Alegre (RS), in a meeting with representatives of the State government and entities of the productive sector to discuss the application of Law No. 16.326/2025, authored by state deputy Elton Weber.

Recently approved by the Legislative Assembly of Rio Grande do Sul, the legislation establishes administrative sanctions and restrictions on companies involved with products of illicit origin, with a special focus on historically affected sectors, such as tobacco and wine, promoting the appreciation of legal production and protecting state revenue.

Present were the Chief of Staff, Artur Lemos, representatives from the Finance and Public Security Secretariats, the State Attorney General's Office, as well as members of the Brazilian Tobacco Growers Association (Afubra), the Consevitis-RS Institute and the Federation of Agricultural Workers in RS (Fetag-RS).

For SindiTabaco, the regulation and effective implementation of the new law represent an important step in confronting unfair competition generated by the illegal market. "For years, we have been severely impacted by smuggling, which jeopardizes jobs, income, and the sustainability of the formal production chain. Therefore, we consider it essential to join forces to ensure the effectiveness of this new legislation," Thesing states.

During the meeting, data was also presented highlighting the scale of the smuggling problem in the country. Based on Ipec data (2024), the illegal market already represents 32% of all cigarettes sold in the country, generating approximately R$34 billion annually. Illicit activity causes billions in losses to the Brazilian government, both in terms of tax revenue and a direct impact on the formal economy. Tax evasion resulting from smuggling is estimated to have reached R$105 billion over the last 12 years. In 2024 alone, losses from smuggling reached R$9 billion, a figure that could be reinvested in public policies, infrastructure, and security.

The legal cigarette industry in Brazil, which generates thousands of direct and indirect jobs, suffers from unfair competition from smuggled products, especially those from Paraguay. The neighboring country produces around 50 billion cigarettes per year, of which only 2 billion are consumed domestically. The remainder—about 96%—is destined for smuggling, with Brazil being the main destination, absorbing over 30 billion units annually.

The reason behind this flow lies primarily in the difference in tax burden: while Paraguayan cigarettes face a tax rate of approximately 13%, Brazilian products are taxed between 70% and 90%. This tax disparity results in a significant price difference. In 2024, the average price of legal cigarettes in Brazil was R$8,13, compared to R$5,21 in the illegal market—a difference of 56%. In the low-price segment, this gap reached R$1,56 in 2025, which represents a direct stimulus to the consumption of illicit products by the most vulnerable social classes.

In addition to the tax issue, the fight against smuggling faces other obstacles. The federal budget allocated to combating organized crime was cut by R$708 million in 2024, further weakening the enforcement structure at the borders and in cities. It is estimated that Brazil loses more than R$500 billion annually to smuggling of goods in general, highlighting the urgency of coordinated action.

"Added to this is the growth of new challenges, such as the electronic smoking device market, which is currently 100% dominated by smuggling, as these products are unregulated and untaxed in Brazil, while their consumption increases annually," adds Thesing. According to Ipec (2024), Brazil has more than 3 million DEF users, and the lack of regulation of this new market is already having significant economic impacts, both in terms of employment and tax revenue.

According to a study by Fiemg (2024), the regulation would have the potential to generate approximately 124,5 new jobs nationwide. These jobs would span from the production chain to logistics, commercial, and inspection sectors, directly benefiting local economies—such as that of Rio Grande do Sul, a traditional tobacco production hub—and strengthening the formalization of the sector.

On the other hand, the lack of regulation has generated serious economic losses for the state. According to data from the University of São Paulo (2024), Brazil is expected to lose approximately R$10,5 billion in revenue in 2025 due to the lack of a regulatory framework that allows for the adequate taxation of these products, currently dominated by smuggling.

"This amount represents a significant loss to public coffers, with direct impacts on the capacity to invest in essential areas such as health, education, and public safety. Therefore, regulation is not just a health or legal control measure; it is a strategic tool for economic development, capable of fostering jobs, recovering tax revenue, and reducing the footprint of the illegal market in the country," emphasizes the president of SindiTabaco.