The global market for illicit cigarettes has sunk its teeth into supply chains around the world – though substantially more so in some areas than others – and ongoing counterfeit tobacco trade could be costing some governments up to €1 billion ($1.09 billion) annually.
The massive international disbursement of illicit cigarettes drains governments of yearly tax revenue, is suspected to support terrorist organizations and is consistently proving costly for companies that manufacture and distribute the products. In fact, as many as one in 10 cigarettes consumed are suspected to be counterfeited goods. In 2013, that amounted to 570 billion individual cigarette sticks. The thriving state of the illicit tobacco market has prompted responses from governments and manufacturers all over the world, in efforts to reduce counterfeiters’ influence, but it remains to be seen how effective these strategies will be. Many of these plans aren’t without criticism already, however, the issue of counterfeit cigarettes is one that cannot be ignored – its drain on tax and sales revenue is too substantial to ignore.
A live example, highlighting the scale of the existing illicit tobacco trade, would be Greece, whose cash-strapped government could save 1 billion euros a year if it eliminated contraband tobacco, according to a recent report.
Since 2008, the share of the Greek cigarette market estimated to be fake has grown significantly, up to 18 percent in 2013 from the previous measure of 5 percent, according to data from Euromonitor International. The research organization estimated that in 2014, that share reached 21 percent of the 229 million non-duty paid packs smoked. If this is the case, then Greece lost an estimated €740 million in tax on counterfeit cigarette consumption. This could easily surpass €1 billion by 2019 if the flow of illicit tobacco continues unabated in Greece.
Greece isn’t the only country losing money to counterfeit tobacco sales, either. Illicit trade of tobacco reached a global market penetration of 9.5 percent in 2013, according to Euromonitor International. These illegal products have tainted many economies and drained potential tax revenue from them.
Thankfully, there are many solutions available to counteract this problem. The use of high-tech digital stamps is one in particular that can assist governments in combating illicit tobacco sales. Countries that implement these beneficial technologies can experience vast benefits that the advanced indicia can offer.
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