The Observador reports this week that consumption of contraband tobacco is increasing in Portugal. The Portuguese state loses an estimated €100 million annually in tobacco tax revenue due to smuggling. The second-in-command of Portugal’s anti-tax unit, Lieutenant Colonel Paulo Messias, told reporters that seizures and infractions are increasing, and Portugal is evolving from a mainly production and transit route for illegal tobacco to a market for consumption.
The article notes that the EU is introducing a track and trace system to help fight the growth in illegal trade in Europe. The latest evidence from Portugal shows that a system which can effectively fight illicit tobacco trade is sorely needed. The EU law, however, does not fit this brief. Instead of introducing a sensible system to prevent illegal trade, the European Commission is instead pressing forward with an overly complex, unworkable system, the only effect of which will be to create unnecessary costs and inefficiencies and further consolidate the tobacco market in Europe. The European Commission Anti-Fraud Office (OLAF) stated this week that “illicit whites” are steadily dominating the illicit market noting the influx of cheap whites from outside the EU. An important share of the illicit tobacco market in the EU remains composed of contraband and counterfeit cigarettes.
ESTA Secretary General Peter van der Mark said: “The latest data from Portugal provides further undeniable evidence that illegal tobacco is a serious and growing problem in Europe. Rather than proposing sensible, evidence-based policies to prevent this, the European Commission is stubbornly pushing forward with an incredibly ill-conceived track and trace system for tobacco costing billions. As the deadline for implementation of the system in Member States comes ever closer, it has become abundantly clear to all involved that the Commission’s system is literally unworkable. This will only force smaller producers out of business, consolidating the market even more in the hands of a few players, whilst leaving illicit products untouched.”