Illegal cigarette consumption falls

By TPN/Lusa, in News, Business · 26-06-2021 10:00:00 · 0 Comments

The consumption of illicit cigarettes in Portugal decreased from 5.6 percent in 2019 to 4.6 percent in 2020, the year in which the State will have lost tax revenue of 70 million euros, concluded a study by the consultancy KPMG.

The study was carried out by consultant KPMG for Philip Morris International on the consumption and flows of illegal cigarettes in 30 European countries - the 27 Member States of the European Union (EU), plus the United Kingdom, Norway and Switzerland - and published in Portugal by Tabaqueira, a subsidiary of that group. This behaviour of illicit consumption corresponds, according to the KPMG report, "to a loss of tax revenue for the Portuguese State in the order of 70 million euros (27 million less than in 2019)".

The statement released about the study states that the behavior in the European market was different and, while the total consumption of cigarettes continued to decline, the percentage of illicit cigarettes increased by 0.5 percentage points, representing 7.8 percent of total consumption in 2020 and to reach 34,200 million cigarettes consumed in the EU-27 countries. The rise in illegal cigarettes – consisting of smuggling, counterfeiting and illicit “white brands” – was driven by an “unprecedented” 87 percent increase in the consumption of counterfeit products, with the loss of tax revenue for governments the EU-27 amounted to around €8.5 billion, it continues.

Cited in the statement, the director general of Tabaqueira, Marcelo Nico, said that, “despite what has been seen in the European scenario, the results presented by Portugal show the decisive and committed work that the Portuguese authorities have been developing to counter this harmful phenomenon for public health and safety”, as well as for “the public coffers”, since being counterfeit products, “they do not pay tax”. “The fight against the illicit tobacco trade calls for action by the State and companies, which must join efforts to work in cooperation and in a concerted manner, aiming at public safety and health, while defending public finances”, warned the manager.

KPMG's independent annual report to PMI also shows how legal and illicit cigarette consumption has been affected by the Covid-19 pandemic, in a period of confinement and restricted movement of people within the EU, along with declines in affordability . The document estimates that total cigarette consumption fell 4.7 percent last year to 438.8 billion in the EU-27, while pandemic-related border controls and travel restrictions led to a sharp drop in non-use. which fell 18.5 percent in 2020 (11.9 billion cigarettes).

The consumption of illicit “white brands” and other contraband cigarettes decreased year on year, but the study indicates that these declines were “more than offset by an increase in counterfeiting, which almost doubled in 2020”, representing 10,300 million cigarettes false, compared to 5.5 billion the year before, the study reads. The work estimates that this was mainly driven by the “unprecedented increase” in the consumption of counterfeit cigarettes in France, reaching 6,000 million fake cigarettes consumed in this country alone.

Interviews with police authorities carried out by KPMG for this study indicate that organized criminal groups “continued to move their operations within EU borders, while a large proportion of illicit 'white marks' and counterfeit cigarettes are produced in illegal factories within the EU”. This fact is also confirmed by the growing number of police raids on illegal cigarette factories in several European countries, he adds.



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