Increasing Cigarette Tax Driving Consumers to Illegal Tobacco Market

    cigarette smuggling

    According to sources, the Greek state has missed out on an opportunity to reap around 800 million euros in tax revenues due to tax hikes on cigarettes in 2016, as consumers turn to illegal tobacco markets.

    The data shows that although people have not stopped smoking, there is a drop in the amount of tax revenues on tobacco products being collected annually by the Greek state. For example, in 2011 the state reported budget revenues of 3.9 billion euros; 3 billion from the special consumption tax and 900 million from the value-added tax. However, in 2015 the state coffers reaped just 3.1 billion euros; 2.4 billion from the special tax and 700 million from VAT.

    With a steady increase of taxes on cigarettes, the state has fallen short of cashing in as the market share of illegal tobacco products has doubled over the past six years going from 10.1 percent in 2011 to 20 percent in 2016. There is another take hike on the horizon according to sources, who say that in 2017 tobacco products will see another state planned tax hike of 40-50 cents more per pack, driving consumers to illegal markets which are expected to grow to 25 percent next year.