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Cigarette smuggling, in a slight decrease
The cigarette black market has slightly decreased in September 2014, being located at 15.4%, compared to 17% in July, according to the data supplied by the Novel Research Company. The smuggling level registered in September is the lowest of 2014. The black market is, however, still at rates higher than the yearly average, about 13%, registered during 2012-2013.
"The Western region was mostly affected in September by the illicit cigarette trade, as in this area of the country the black market is on a fulminant rise (by 16 p.p., up to 42.1%). The next region significantly affected by the smuggling continues to be the North-Eastern area, with an increase of 1.8 p.p., up to 35.9%. Significant drops are registered in the North-Western areas (minus 7.9 p.p. down to 11.8%), in Bucharest (minus 7.9 p.p. down to 7.9%), in the South-East (minus 6.9 p.p., down to 7.2%), as well as in the South-West (by 2.6 p.p. down to 14.7%). The lowest levels of the black market are registered in the Central and Southern areas (3%). As regarding the origin, the”cheap whites” continue to hold the highest preponderance (48.7%), more than Ukraine (24%) and Moldova (16.6%) together.” has stated Marian Marcu, the Manager of the Novel Research Company.
„The drop of the black market noted in September is the result of the efforts made by the competent authorities in fighting against smuggling, which are also supported by the tobacco companies. Recently, a Protocol between ANAF (the National Agency for Fiscal Administration) and the cigarette manufacturers was signed, who are getting organized in a framework created for future joint programs. JTI shall maintain its successful partnerships initiated with the authorities in 2005, supporting the professional development of the customs officers, by offering assistance for the training of new canine teams, as well as by the development of public anti-smuggling campaigns in the border areas of the country. We have a similar positive cooperation with the Border Police and the General Police Inspectorate. Meetings are convened from time to time with the representatives of the authorities in order to discuss certain specific measures (for instance, the common operation developed by the Customs of Romania and Moldova, organized in July-August, further to the alarming results provided by the Novel study regarding the North-East). It is remarkable that during the past weeks three smuggling networks were destructured in Constanta, Ia?i and Timi?, while in Bucharest an illegal warehouse was discovered. For the efforts of the authorities not to become mere resource losses, a coherent tax policy is mandatory. We would like to remind that the entry of smuggling on an ascending trend, as of last year’s end, was caused by the artificial indexation of the exchange rate set for the excise calculation, plus the annual increase of the excise duties in April, which has determined the growth of the price difference between the legal products and the ones from the black market. Currently, despite the law, the exchange rate to be used for calculating the excise duties for the next year is still unknown”, has stated Gilda Laz?r, Corporate Affairs & Communications Director at JTI Romania, Moldova and Bulgaria.
„In September, cigarette smuggling has dropped 1.6 percentage points compared to July. It is encouraging, considering that the legal sales are growing and, consequently, the paid taxes are growing too. A smuggling percentage point recovered from the black market means additional yearly revenues for the State Budget of approximately EUR 35 million. We must point out, however, that such amounts are obtained based on additional efforts and resources. For the searches and arrests involved by the dismantling of the criminal group in Constanta only, a deployment of 180 police officers was required! And these efforts of the Police, Customs, Border Police, supported by the tobacco companies, should continue for the black market not to take again the ascending trend. The criminal networks are adjusting themselves fast, and the authorities are forced to act accordingly, such efforts should be supported, however, also by a balanced tax environment. To this end, we hope that the work group at the Ministry of Finance shall not undermine the actions of the National Agency for Fiscal Administration, the General Customs Direction, the Border Police, the General Police Inspectorate, and to identify the optimal solution in regard of the exchange rate at which the excise duties shall be calculated, for both the budget and the legal manufacturers”, has stated Adrian Popa, Corporate & Regulatory Affairs Director at BAT Romania.
“We hope that the decrease registered according to the last study is not temporary and the efforts made by the authorities in order to secure the “hot areas” are successful. Recently, Romania and Ukraine have signed the small border traffic agreement, and the consequences thereof in regard of the illicit traffic shall occur soon enough. Moreover, according to the Novel study, the Western area has become in September the region most affected by the black market, while during the entire year 2014, the North-Eastern area had recorded the highest share of the illicit cigarette trade”, has stated Sorana Mantho, Corporate Affairs Director at Philip Morris Romania and Bulgaria.
In the opinion of the three tobacco manufacturers, in order to restrict the black market, it is necessary, along with the uniform regulation, based upon volume criteria, of the tax evasion and cigarette smuggling felonies, to clarify the situation existing at the internal border crossing points with Hungary and Bulgaria, as well as to establish the specific duties of the local police force and of the gendarmerie, as the illicit cigarette trade takes place in their competence area (markets, fairs, subway stations etc.).
The large tobacco manufacturers have signed cooperation agreements with the European Commission to fight against the illicit trade with tobacco products, and support the establishment, from the amounts allotted to Romania under such agreements, of a premium fund for the people with special results registered in the fight against cigarette smuggling.
The tobacco industry is the second largest taxpayer to Romania’s State budget, after the oil companies. In 2013, over 40% of the revenues from excises consisted of tobacco excises. Last year, the tobacco industry has paid to the budget over EUR 2.6 billion, representing excise duties, VAT, taxes and contributions.