Speakers at the ‘2nd Anti-Corruption Forum: Toward a Sustainable Economy in the Tobacco Sector’ in Greece last week noted that one in every five cigarettes in the Greek market is illegal, and that 50% of small enterprises in the tobacco sector have shut down. The Director General of the Hellenic Federation of Enterprises (SEV), Akis Skertsos, concluded that “the growth of the illegal tobacco product market in Greece, as a result of overtaxation in the sector and the state’s inability to strengthen the inspection mechanisms, is jeopardizing 60,000 jobs across the entire domestic tobacco supply chain.”
Illegal trade harms everyone in the industry, from farmers and manufacturers through to consumers. Small producers of tobacco are the most vulnerable due to their relatively smaller market share. Reckless tax policy destroys jobs and undermines revenues for the state by sending more consumers to the illegal market. It is incumbent upon governments to introduce policies supported by the economic evidence which shows a direct link between overtaxation and increases in illegal trade.
ESTA Secretary General Peter van der Mark said: “It is reckless and irresponsible for tax authorities to introduce policies which drive consumers to the illegal market. As well as funding criminal organisations, such policies result in less tax revenue for the state, thereby making every citizen pay for ill-conceived policies. Smart tobacco policy protects government revenues, reduces illegal trade and protects consumers from counterfeit products. Here again we see the need for evidence, not ideology, to drive public policy in Europe.”