Smuggled cigarettes accounted for 15 percent of the market in November this year in Romania, up from 11.8 percent in September, according to data from cigarette producer JT International. Smuggling climbed back to the level reported in July 2011, after a downward trend in 2010 and in the first half of 2011. The historic maximum in cigarette smuggling was 36.2 percent of total sales in January 2010, after the increase in cigarette excises. This pushed the average for 2010 to around 15.2 percent, according to cigarette producers. The tobacco industry is one of the largest contributors to the state budget in Romania– EUR 2.5 billion in excises, VAT and other taxes in 2010.

“A predictable fiscal policy determines growth in legal sales, which triggers higher taxes paid to the state. We should highlight that a percentage point drop in cigarette smuggling equals EUR 30 million in taxes to the state budget,” said Adrian Popa, manager within BAT Romania.

The increase could be caused by seasonality, expectations for the year-end, and concerns on a deeper economic crisis, together with a drop in winter time spending, believes Gilda Lazar, head of corporate affairs and communications with JTI Romania. “We should also mention how inventive smugglers are – they now smuggle cigarettes via the hang-glider or under water, while budgets for fighting smuggling and the number of customs officers have dropped,” Lazar added.

Cigarette producers, otherwise competitors when it comes to convincing customers to choose their brands, work together and have stated their willingness to cooperate with the authorities to fight cigarette smuggling. They are asking for clear guidelines for local police, so they can fight the sale of smuggled cigarettes in open markets, as well as a clearer situation at the borders with Hungary and Bulgaria, where customs check points no longer exist.

editor@romania-insider.com

(photo source: BAT)