Tax­a­tion, lack of checks boost il­le­gal to­bacco

Kathimerini English - - Focus -

Tax hikes on cig­a­rettes and other to­bacco prod­ucts have led to a spike con­tra­band ac­tiv­i­ties in the sec­tor that are eat­ing into rev­enues. In 2016, one in five packs of cig­a­rettes con­sumed were il­le­gal. This is the sec­ond high­est level in the Euro­pean Union, re­sult­ing in losses of over 600 mil­lion eu­ros in tax rev­enues for state cof­fers.

The out­look for this year is even worse. A re­cent study by the Foun­da­tion for Eco­nomic and In­dus­trial Re­search (IOBE) es­ti­mates that, this year, con­tra­band cig­a­rettes will ac­count for 30 per­cent of sales.

The first six months of the year have shown a steep de­crease in the le­gal mar­ket, at a pace that is twice what it was dur­ing the same pe­riod last year, while rev­enues are fac­ing se­vere pres­sure.

Another prob­lem is the lack of in­spec­tions, which a re­port on Pro­ject SUN by KPMG has fo­cused on. It points out that there are no fixed X-ray ma­chines at any Greek port – not even in Pi­raeus, the third largest port in Europe.

In­dus­try play­ers be­lieve that the big prob­lem is tax­a­tion. From the start of 2017, 90 per­cent of the aver­age re­tail price of a pack of cig­a­rettes is taxes. It is re­minded that the to­bacco in­dus­try cur­rently sup­ports 60,000 jobs in Greece, half of which are in to­bacco grow­ing, and the rise in con­tra­band cig­a­rettes poses a se­ri­ous threat.

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