High taxes and austerity make Greeks turn to smuggled cigarettes at half the price.
By Andy Dabilis for Southeast European Times in Athens -- 21/01/14
A woman purchases cigarettes in the Athens central market area. [AFP]
The Greek government continues to tax tobacco products as part of the austerity measures demanded by international lenders while simultaneously trying to stop the growing trade in illegal cigarettes that threatens revenues.
Cigarettes are a prized commodity in Greece. Forty percent of the population smokes, which is the highest rate in Europe and one of the highest in the world.
The government raised the tobacco tax by more than 20 percent since the economic crisis began in 2009 and recently announced another 5 cents tax per cigarette pack.
Austerity-stricken Greeks are responding by increasingly turning to illegal cigarettes that usually are half the price of those sold at retail.
The government estimated it is losing about 700 million euros annually to the illegal cigarettes trade. The finance ministry said tobacco revenues decreased by 11 percent in the last two years, down to 2.7 billion euros.
Ilias Asimakopoulos, chief executive of JT International Hellas, the second-biggest tobacco company in Greece, said the illegal cigarette market has grown to more than one-fifth of the local cigarette market.
"Some 4.7 billion illegal cigarettes enter the Greek market every year," Asimakopoulos said.
Experts said the government is in an unenviable position to raise revenues and combat cigarette smuggling.
The trade is so huge and the attempts to stop it are ridden with so many obstacles that they are seemingly futile, said Haralambos Tsardinidis, an economist at the Institute for International Economic Relations in Athens.
"The government tries to control the illegal cigarettes trade but there is too much corruption in the tax offices," Tsardinidis told SETimes.
In response, authorities have made additional efforts to identify corrupt officers as part of attempts to break the illegal supply chains.
A special officer in the Attica police department was suspended on suspicion of participating in a criminal gang smuggling contraband cigarettes. The case involved 30 suspects, 27 of which were arrested in Laconia and Attica, including two coast guard officers charged with helping smugglers.
Moreover, authorities continue to interdict smugglers with large cigarette batches. Last year, the Greek coast guard intercepted 200,000 packs of cigarettes, while customs officials confiscated nearly 2 million packs in the port of Piraeus alone, worth more than 6 million euros.
"The problem of street vendors is strongly related to illegal immigration and its management is a political issue," Effi Lambropoulou, a criminologist at Panteion University in Athens, told SETimes.
Lambropoulou said the financial police have said they do not have jurisdiction in contraband goods.
"[But] the contraband has all the characteristics of organised crime, which is the responsibility of the financial police," she added.
The number of cigarettes sold legally fell from 34 billion in 2009 to 25 billion in 2011, and will continue to decrease because of new taxes, according to Euromonitor International.
Some smokers, however, disagree. Kleon Antoniou, a well-known musician and a heavy smoker, said the smuggled cigarettes lack quality controls.
"You cannot trust them because they come from places like Bulgaria and Romania," Antoniou told SETimes.
What can the Greek authorities do to stop the illegal cigarettes trade? Share your opinion in the comments space.