Cigarette smuggling up again in March in Romania, after fiscal and excise changes

Cigarette smuggling reached 15.8 percent in March in Romania, up 0.1 percentage point, with higher smuggling ratios in the North-East and Western regions, according to Japan Tobacco International (JTI) Romania, citing data from Novel Research. Cigarette smuggling was at 32.4 percent in the North – East region, and at 30.8 percent in West, both up – by 8.2 percentage points and 9.7 percentage points, respectively. In Romania’s southern region, smuggling reached 7.6 percent, up for the third time in a row, while in Bucharest, it dropped by 7.2 percentage points, to 6.6 percent. “Cheap Whites” cigarettes make half of the black market in Romania, said Marian Marcu, head of Novel Research. Cigarettes packs with labels from Moldova and Ukraine are also on an upwards trend, while those with Serbian labels, as well as those from duty free shops, are decreasing, Marcu further explained. The price difference between products sold legally, and products sold on the black market is of only RON 5 – or some EUR 1.1 – which makes the March peak, as well as the sudden increase in the black market in January all the more worrying, said Gilda Lazar, Director Corporate Affairs & Communications, JTI Romania, Moldova and Bulgaria. The higher smuggling rate shows it is difficult to stop the chain reaction after the recent unpredictable fiscal and excise changes, which led to the cigarette price increase, explained Adrian Popa, Director Corporate & Regulatory Affairs, at British American Tobacco Romania. He reminded that one percentage point down in smuggling equals EUR 35 million extra to the state budget. Sorana Mantho, Director Corporate Affairs, Philip Morris Romania and Bulgaria, added that a drop in illegal cigarette trade is not easy to trigger, and requires efforts, the effects of which are not immediately seen. The tobacco industry is the second largest contributor to the state budget, after oil and gas. Tobacco companies paid over EUR 2.6 billion to the state budget in 2013 in excises, VAT, taxes and other contributions. editor@romania-insider.com