By Edit Herczog MEP and Daniel Witt - 1st December 2011
Statistics show that cigarette smuggling and counterfeiting is booming and must be tackled head on if we are to have any effect at all
Edit Herczog MEP and Daniel Witt
It is time for the EU to tackle the tobacco black market head-on, write Edit Herczog and Daniel Witt.
Tobacco is currently under the spotlight in the EU, as the European commission revises the tobacco product directive.
The European parliament will have an important role in making sure that any legislation is properly and proportionately implemented to improve the well being of EU citizens. This important aspect, however, occasionally overlooks the illicit trade of cigarettes.
The regulatory focus has so far been on cigarettes that are being legally purchased instead of the increasingly large number of illegal cigarettes that fall outside of the system. Statistics show that cigarette smuggling and counterfeiting is booming and must be tackled head on if we are to have any effect at all.
According to World Bank and industry estimates, illegal cigarettes already account for approximately 10 per cent of all cigarettes consumed across the EU, reaching the highest level since 2006.
A 2010 Euromonitor study reported that some countries, such as the Baltic States see more than one out of every three cigarettes coming from the black market.
In practice, this means that the EU is currently losing some €10bn (per EU commission estimates) every year in tax revenues to the black market – money that would be very much welcomed by member states who are faced with the challenge of imposing austerity programmes and cutting many vital services.
In fact €10bn is almost exactly the same as the average annual EU expenditure for employment creation across all 27 EU member states under the European social fund.
But this is not just about money. It should also be about what is good for our citizens’ wellbeing. The fact that such a large and illegal industry is being run by criminal gangs, who are often also involved in weapons, drugs or human trafficking, is a frightening one.
The harmful effects of smoking are well known, and tobacco products are rightly closely regulated. However, illegal traders have no reason to follow any laws, but rather want to sell as many cigarettes as possible to as many people as possible – whether adults or children.
The recession might have hit many hard, but the criminal gangs have made record profits at the expense of citizens.
The European commission has recently published a report on its public consultation regarding the proposed revision of the tobacco products directive.
The report shows the huge interest in this piece of legislation – there were over 85,000 replies, of which 96 per cent came from EU citizens – a commission record. The illicit trade in cigarettes, as well as the effect that changing regulations might have on it, were brought up as particular concerns.
The commission needs to listen closely to citizens’ concerns. Tobacco is an industry that must be thoroughly regulated, but we should not lose sight of the flourishing illegal tobacco market when considering regulations.
If new laws are not carefully considered in terms of how they may impact the black market, rather than tackling smoking, they may end up transferring the wellbeing of EU citizens to the hands of criminals.
By not tackling the problem of the black market in cigarettes head on, more and more cigarettes are entering circulation where there is no control of what they contain, how they are sold and who they are sold to.
If this is not dealt with then any new proposals will be redundant and ineffective.
Edit Herczog is a member of parliament's industry, research and energy committee
Daniel Witt is president of the International Tax and Investment Centre (ITIC), which recently published a report on how to tackle the illicit trade in tobacco products
