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May 24, 2019
Philip Morris International: New Study Finds EU Black Market for Cigarettes Reaches Record High; Member State Tax Loss an Estimated €12.5 billion
“In the midst of the economic crisis and budget deficits, illegal
cigarettes continue to plague
The study, which is conducted annually by KPMG for
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%; Greece13.4%; Poland: 13%; and Germany: 11.1%.
UK, Greece, Italy, and Estoniaare 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
- 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
Italybetween 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.
PMI has a dedicated team which works closely with governments and enforcement groups around the world to address this issue. Tackling the problem requires both the private and public sectors to address the supply and demand of illegal tobacco products, in addition to ensuring that the regulatory and fiscal environment does not further drive its growth.
To read KPMG’s report, understand more about the black market for tobacco and to learn what PMI is doing to meet this challenge, visit www.pmi.com.
KPMG Study on the illicit cigarette consumption in the EU
KPMG has conducted this study every year since 2006, as part of the
cooperation agreement between PMI, the
Philip Morris International
PMI Press Office
Phone: +41 (0) 58 242 4500