COMMUNITIES across the North-East are losing their corner shops because of cigarette smuggling, an investigation by The Northern Echo has revealed.

More than 50 closed in the first half of this year in the region - up one third on the previous six month's figures.

The figures destroy the myth that the trade in bootleg cigarettes is a "victimless crime".

New facts show that in addition to depriving the Government of approximately £2.5bn a year in revenue that could benefit the NHS and education, the smuggling is also ruining livelihoods and depriving communities of a vital service.

Customs officials say that the North-East is becoming the smugglers' capital of Britain.

Rob Hastings-Trew, North-East customs spokesman, said: "What we see are millions of cigarettes heading towards the North-East."

A four-day undercover customs operation in the region last week revealed the scale of the problem.

Of 188 premises targeted, 78 were stash houses for contraband sales - the highest hit-rate experienced by customs officers in the country.

Colin Wills, regional manager of the National Federation of Retail Newsagents, said: "More and more newsagents are going to go out of business.

"It is a lucrative business to be in because of the Government sticking its head in the sand and not recognising what is going on."

Shopkeepers are fighting a daily battle to keep afloat.

George Thompson, owner of GM Thompson Newsagents in Shildon, County Durham, believes bootleg goods have forced a "hand-to-mouth" existence on previously buoyant businesses.

"It is the biggest problem ever to hit me," he said: "I don't know how to overcome it - it has hit me very, very hard. It's getting worse all the time."

Five years ago, Thompson Newsagents sold about 15,000 cigarettes a week. Now that figure has plummeted to 1,000. The shop has stopped stocking hand-rolling tobacco completely - and yet cigarette paper sales are soaring.

"It pushes you right to the edge," said Mr Thompson. "A lot of smaller business now are on the verge of closing."

Organisations have repeated calls for the Government to cut tobacco taxes in a last ditch attempt to save corner shops.

Ann Grain, of the British Retailers Consortium, said: "The main reason people are not buying cigarettes as they used to in shops is simply because the tax on them is so prohibitive.

"Until the Government acts, retailers are going to have a difficult time. From their point of view it is dire."

But customs officers cast doubts on whether duty cuts would stifle the smuggling trade. "Lowering the duty is not the answer," said Mr Hastings-Trew.

"Countries such as Spain, with lower duty rates than ours, also experience problems with smuggling of tobacco."

Were the Government to reduce tobacco taxes - to rates enjoyed by smokers in Belgium, for example - it would lose an estimated £3.25bn - £0.75bn more than is currently lost to smugglers.

l Tomorrow, The Northern Echo looks at how highly-organised crime rings have cornered the tobacco smuggling market.

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