June 24, 2014

STAR Report 2012

RECORD_LEVELS_2012_490
For the sixth year in a row, the illegal trade of cigarettes in the European Union reached a new record high, a KPMG study revealed. In 2012 the levels rose to 11.1%, compared to 10.4% in 2011, resulting in an estimated €12.5 billion in lost tax revenues to Member States.

The study, which is conducted annually by KPMG for Philip Morris International (PMI), the European Commission, and all 27 EU Member States, also found that:

  • Twelve countries’ consumption of illegal cigarettes exceeded the EU average (of total cigarette consumption), including: Lithuania: 27.5%; Ireland: 19.1%; Finland: 16.9%; UK: 16.4%; France: 15.7%; Greece 13.4%; Poland: 13%; and Germany: 11.1%.
  • The UK, Greece, Italy, and Estonia are home to the sharpest increases in illegal cigarette consumption since 2011.
  • Consumption of illicit cigarettes increased to 65.5 billion cigarettes – an amount equivalent to the entire legal markets of France and Portugal combined.
For the sixth year in a row, the illegal trade of cigarettes in the European Union reached a new record high, a KPMG study revealed. In 2012 the levels rose to 11.1%, compared to 10.4% in 2011, resulting in an estimated €12.5 billion in lost tax revenues to Member States. 

  • It is estimated that had the cigarettes sold on the black market been sold in the legal market, Member State governments would have gained an additional €34.3 billion in tax revenue since the beginning of 2010.
  • Southern European countries continued to increase their share of the illegal cigarette market, a trend that began in 2009. This is primarily a result of a 50% increase in Italy between 2011 and 2012.
  • “Illicit white” cigarettes – cigarettes that are manufactured solely for the purpose of being smuggled – now constitute one-quarter (24.3%) of the illegal cigarettes smoked in Europe, compared to just 2.4% in 2006.

The illicit trade in tobacco products fuels organized crime and damages economies and societies in the EU and around the world.  The primary drivers of this activity are: high profitability compared to low risk of penalties for criminals; insufficient financial and human resources and lack of cross-border cooperation to combat the problem; extreme tax and regulatory schemes that shift consumption from the legal to the illegal tobacco market; the current economic downturn; and low public awareness about the penalties and consequences of the illegal tobacco trade.

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