Tobacco Smuggling: Smoking the Taxes Away

cigarette smuggling

More than 33 million packs of illicit cigarettes have been confiscated in the Greek and Cypriot customs at the end of January by the European Anti-Fraud Office (OLAF) and the General Secretariat against corruption (AFCOS Greece). The two organizations collaborated in order to achieve a strong hit against tobacco smuggling, a plague that yields more damage to the economy than someone would think.

In addition, almost 21 million packs of cigarettes were confiscated in the Pireaus port, resulting in 54 million packs of confiscated cigarettes in Greece.

“A long journey has come to an end, in the first month of 2016: European cigarettes that had been legally shipped to Asia, ended up finding their way back to Europe, this time, illegally. During an operation that lasted many months, the European Anti-Fraud Office (OLAF) cooperated closely with the Greek and Cypriot authorities in order to locate and confiscate more than 33 million cigarettes in Greece. Out of the five operations, this has been one of the biggest, in which more than 75 million cigarettes were confiscated in Greece, Russia, Germany and Spain, from December 2015 and January 2016,” according to OLAF.

However, despite OLAF’s encouraging announcement, a recent article by Bloomberg reveals some worrying numbers regarding tobacco smuggling and tax revenue. Αccording to the publication, more than 670 million euros is lost in annual revenue, due to the illicit tobacco trade.

“Illicit cigarette and bulk tobacco trade strips the Greek state from significant revenue each year that could be used for paying pensions, salaries, and social benefits,” stated Iakovos Kargarotos, vice-president of Philip Morris International’s affiliate in Greece, Papastratos AVES. “It creates a big public revenue hole that taxpayers have to fill,” he told Bloomberg.

The smokes are sold in the “black market” at around 12 euro per carton. They seem to originate from China, Egypt and Pakistan and they reach Greece by sea.

Given that Greece has one of the highest percentages of smokers in the world, the tax evasion linked to illicit tobacco trade causes a great bleed to the country’s economy, costing several millions.