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Illegal cigarette smuggling avoids €10 billion in taxes in the EU

By May 14, 2018No Comments

Il Sole 24 Ore reports that countries such as Belarus and Ukraine are key routes for cigarettes smuggled into Italy. Experts stress that smuggling would not be possible if it were not combined with a high rate of corruption in the public institutions of many eastern countries. Another main route for ‘cheap whites’ entering the country is through Libya, due to its unstable political situation. Cigarette smuggling costs EU member states €10 billion a year.

The article covers the link between illicit tobacco and taxation. In the USA, for example, New York raised taxes on tobacco products. These price increases did not generate a decrease in consumption, however, even among young people. On the contrary, it generated a contraction in the legal market, simultaneously accompanied by an uptick in smuggled cigarettes.

ESTA Secretary General Peter van der Mark said: “The situation in Italy shows the reach of tobacco smuggling networks into Europe. From Europe’s southern and eastern borders illegal tobacco enters the EU, undermining government revenues and placing consumers at risk. These organised crime networks are allowed to thrive on the back of ill-conceived taxation policies which funnel people into the illegal market, costing the EU billions every year. A new approach to tobacco policy is required, one which integrates taxation with smuggling prevention.

Read more about tobacco taxation.


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