BUSINESS

Illegal tobacco and alcohol trade costs state dearly

PROKOPIS HATZINIKOLAOU, DIMITRA MANIFAVA

TAGS: Taxation, Crime, Finance

State coffers miss out on around 700-750 million euros per year in taxes due to trade in contraband tobacco and alcohol, surveys show, with takings dropping by the year because of the expansion of the phenomenon since the outbreak of the crisis in 2010.

Figures presented at the “2nd Anti-Corruption Forum: Toward a Sustainable Economy in the Tobacco Sector” showed that the state imposed taxes, levies and fines of 742.57 million euros on tobacco products in 2017, but only a fraction of that flowed into state coffers.

In the period from 2010 to 2017, the Financial Crimes Squad confiscated 1.27 billion smuggled cigarettes and 27.81 tons of contraband tobacco.

Speakers at the forum noted that one in every five cigarettes in the Greek market is illegal, and that 50 percent of small enterprises in the tobacco sector have shut down.

Hellenic Federation of Enterprises (SEV) director-general Akis Skertsos said that “the growth of the illegal tobacco product market, as a result of overtaxation in the sector and the state’s inability to strengthen the inspection mechanisms, is jeopardizing 60,000 jobs across the entire domestic tobacco supply chain.” While Greece has the highest tax on tobacco products in the European Union, “state revenues continue to decline or, at best, do not grow,” he noted.

Meanwhile the state’s lost revenues from the illegal trade in alcoholic drinks is estimated at between 90 and 147 million euros, according to a study by the Foundation for Economic and Industrial Research (IOBE) presented yesterday.

If one adds the consequences of illegal alcohol trading on the entire supply chain, and not just production, then the lost revenues reach up to 430 million euros per year for the state.

Behind this phenomenon and the 49 percent decline in the consumption of legal alcoholic beverages lies overtaxation: In the last 20 years the industry has observed eight tax hikes, with four within the space of 18 months, from 2009 to 2010, sending the special consumption tax soaring 125 percent.

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