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In Hungary, half a billion cigarettes were bought illegally in 2022, depriving the central budget of around HUF 30 billion (EUR 810 million) in excise tax revenues, according to a recent study by KPMG. Criminal organizations are making increasing profits in Europe due to high prices and taxes, reports Világgazdaság.
The illegal cigarette market in the European Union continued to grow in 2022, with France and Belgium topping the list, while Hungary recorded a three percentage point increase despite falling consumption. This represents half a billion cigarettes, or 7.2 percent of the total, according to the KPMG study, which focuses on illegal cigarette consumption in the UK, Norway, Switzerland, Moldova, and Ukraine, in addition to the EU.
According to the analysis, 35.8 billion cartons of illegal cigarettes were smoked in the EU last year, causing states to lose about €11.3 billion in tax revenue, almost nine percent more than a year earlier.
As for the Hungarian illicit cigarette market, its share has reached 2019 levels, with KPMG experts saying that this is mainly due to products made specifically for smuggling, and to a lesser extent, counterfeit tobacco.
Most of these products come from Ukraine – it is no coincidence that just a few days ago, National Tax and Customs Administration (NAV) staff found 12,500 packs of untaxed cigarettes in a car near Debrecen (eastern Hungary).
The report estimates that illegal tobacco has robbed Hungary’s central budget of more than 30 billion forints (EUR 810 million) in excise tax revenue in 2022.
The study also shows that criminal organizations are making increasing profits by distributing their illicit products in countries with higher prices and tax rates. That is why France and Belgium top the list, even though experts have been stressing for years that tax and price increases and bans cannot reduce the number of smokers, but only the amount legally sold.
It can also be concluded that the pandemic and the Russian-Ukrainian war have led to the illegal distribution of duty-free cigarettes through smuggling and local production.
As proof of the former fact, earlier this year, the National Tax and Customs Office also dismantled a clandestine tobacco factory in Debrecen, where they found nearly €27 million worth of counterfeit cigarettes.
Via Világgazdaság, Featured image via Facebook/Nemzeti Adó- és Vámhivatal
