Philip morris international: new study finds eu black market for cigarettes reaches record high; member state tax loss an estimated eur12.5 billion — wsj.com

     LAUSANNE, Switzerland (BUSINESS WIRE) April 17, 2013 

    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 today. In 2012 the levels rose to 11.1%, compared to 10.4% in 2011, resulting in an estimated EUR12.5 billion in lost tax revenues to Member States.

    «In the midst of the economic crisis and budget deficits, illegal cigarettes continue to plague Europe, costing Member States billions in lost taxes and destroying communities,» said Artyom Chernis, Philip Morris International’s (PMI) Vice President, Illicit Trade Strategies and Prevention. «This problem cannot be ignored by decision makers. Action is needed, and needed now to curb this activity and to find and prosecute the criminals and the networks that promote it. In addition, a comprehensive and thoughtful approach to policies at the EU and Member State level to both combat this problem and ensure it is not made worse in the years to come is essential.»

    The study, which is conducted annually by KPMG for Philip Morris International Inc. (PMI) (NYSE/Euronext Paris PM), 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. 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 EUR34.3 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.

    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

    About Philip Morris International Inc.

    Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in more than 180 markets. In 2012, the company held an estimated 16.3% share of the total international cigarette market outside of the U.S., or 28.8% excluding the People’s Republic of China and the U.S. For more information, see

    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 European Commission and the EU member states. The results of these studies have been shared with the European Anti Fraud Office (OLAF).

     CONTACT Philip Morris International 

    PMI Press Office

    Phone 41 (0) 58 242 4500

    E mail media

     SOURCE Philip Morris International Copyright Business Wire 2013 

    Order free Annual Report for Philip Morris International, Inc.

    Visit /?ticker US7181721090 or call 44 (0)208 391 6028

    Mailing cigarettes — eu — straight dope message board

    #1 08 07 2002, 08 17 AM sirjamesp Guest Join Date Sep 2001 Mailing Cigarettes EU


    What’s the deal with posting cigarettes within the EU?

    I know we supposedly have free movement of goods and all that, but can I post cigarettes from somewhere cheap (eg Spain) to the UK?

    I would think we can, cos otherwise it makes a mockery of this free trade business but my gut feeling is that European governments will have made sure that this «free trade» principle doesn’t harm their precious tax receipts.

    Does anyone know the law here? sirjamesp View Public Profile Find all posts by sirjamesp Advertisements #2 08 07 2002, 08 44 AM UDS Guest Join Date Mar 2002 Re Mailing Cigarettes EU


    Quote Originally posted by sirjamesp
    What’s the deal with posting cigarettes within the EU?

    I know we supposedly have free movement of goods and all that, but can I post cigarettes from somewhere cheap (eg Spain) to the UK?

    I would think we can, cos otherwise it makes a mockery of this free trade business but my gut feeling is that European governments will have made sure that this «free trade» principle doesn’t harm their precious tax receipts.

    Does anyone know the law here? Your gut feeling is absolutely right.

    You can export cigarettes from Spain to the UK. Upon importation into the UK, you are liable to pay the same excise duties as anyone else importing cigarettes into the UK, or producing cigarettes in the UK. This does not change merely because you use the post office as your method of carriage. There is no import duty if you carry the cigarettes with you across the border and they are for your personal use, but this is the exception rather than the rule.

    It doesn’t «make a mockery» of free trade if the pre tax price of the cigarettes in Spain is less than in the UK, there is still an advantage to buying your cigarettes in Spain. Hence UK producers are subject to competitive pressures from Spanish producers.

    Tax is an area of competence that is reserved to the member states, and they guard it jealously. UDS View Public Profile Find all posts by UDS #3 08 07 2002, 08 49 AM ticker Guest Join Date Apr 2000 This was tried commercialy Death Cigarettes set up a mail order company in, I think, Belgium. They claimed that the sale was conducted in Belgium so only Belgian taxes should apply. They lost in court.

    I don’t know what would be the case if you were to go abroad yourself and mail stuff back home but why bother when you can carry it back. ticker View Public Profile Find all posts by ticker #4 08 07 2002, 10 05 AM sirjamesp Guest Join Date Sep 2001 Quote Originally posted by UDS
    It doesn’t «make a mockery» of free trade if the pre tax price of the cigarettes in Spain is less than in the UK, there is still an advantage to buying your cigarettes in Spain. Hence UK producers are subject to competitive pressures from Spanish producers. Ah, that’s true I didn’t think of that.

    I guess that’s the idea behind the aim to harmonise taxes, eh? sirjamesp View Public Profile Find all posts by sirjamesp #5 08 07 2002, 10 17 AM UDS Guest Join Date Mar 2002 Well, not everybody had adopted the aim of harmonising taxes. In particular there’s not much evidence that many of the member states have and, until they do, that particular project is going nowhere.

    But, yes, one of the arguments in favour of harmonising taxes is that different tax rates distort competive forces throughout the market. They mask differences in underlying prices, so that the consumer does not know which product is cheaper, or if tax rates are high enough they make differences in underlying prices irrelevant, so depriving producers of the competitive advantages of efficiency.

    Taxes also distort trade flows. The UK and Ireland can and do put heavy excise duties on wine, thereby reducing wine consumption. Wine producers suffer as a result, but as there are few if any wine producers in the UK and Ireland, this doesn’t matter to those governments. And of course British and Irish brewers and distillers may benefit from high taxes on wine. Flat rate taxes on all food and drink would allow the consumer to eat and drink whatever he wanted, without regard to where it was produced. UDS View Public Profile Find all posts by UDS


    5 комментариев to “Philip morris international: new study finds eu black market for cigarettes reaches record high; member state tax loss an estimated eur12.5 billion — wsj.com”

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