site.btaIllegal Cigarette Trade in Bulgaria in 2007-2017 Generated between LV 2.5 and 3.5 Bln in Revenues for Crime Syndicates - Economists

Sofia, February 1 (BTA) - In the ten years since 2007, illegal cigarette trade generated between 2.5 and 3.5 billion leva in revenues for crime syndicates, according to a report by the Institute for Market Economy (IME). The report has been prepared as part of an IME project entitled By the Rules exploring ways for improving the policies and overcoming institutional weaknesses that breed illegal trade in tobacco products in Bulgaria.

The authors of the report warn that short-sighted excise policy is capable of undermining the accomplishing of two key political goals: in the area of health care (reducing smoking) and in taxation (ensuring steady budget revenue from taxing tobacco products). Excessive and steep rise of excise duties invariably bring about a growth in illegal trade, the economists say.

In 2007, illegal cigarettes were 11.2 per cent of the entire cigarette market in Bulgaria. By 2010, this share had risen to 30.7 per cent and the cigarette market was virtually inundated by contraband cigarettes generating huge proceeds for organized crime to the tune of 450 to 640 million leva a year.

Despite the shrinking illegal market in the years that followed, criminal revenues remain too big to be neglected: between 120 and 170 million leva in 2016 from the sale of some 1 million contraband cigarettes. "Most of these resources end up in crime syndicates and allows corruption in all corridors of power," says the report.

According to the report authors, quite a lot of the illegal cigarettes originate in Bulgaria. "It means that combatting contraband trade should not be focused solely on protecting the borders but on more efficiently controlling domestic production as well," the report reads.

Its authors bring to attention the huge illegal market in loose tobacco for roll-your-own cigarettes. Contraband loose tobacco makes up as much as 75 per cent of the total market which makes some 646 t. This quantity is equal to 861 million cigarettes (0.75 gr per cigarette). Some 86 per cent of the contraband loose tobacco is locally produced.