The Czech Republic shares concerns of illicit tobacco trade

EU faces an uphill battle to stem the flow of illegal cigarettes pouring through its borders and across its Member States, warned the International Tax and Investment Centre (ITIC) the participants at a meeting on intellectual property, counterfeiting and piracy hosted by the European Parliament’s Kangaroo Group on May 26 in Brussels.

Illegal cigarettes account for approximately 9% of all cigarettes consumed across the EU, costing governments an estimated €10 billion in lost tax revenues each year. However, the consequences of illicit trade reach far beyond government revenue loss. “It is fundamental that government policy aimed at reducing tobacco consumption assesses any potential impact on aggravating illicit trade,” said Daniel Witt, President of ITIC. At the end of May, retail associations from 11 EU countries signed a joint declaration opposing measures being put forward under the revision of the EU Tobacco Product Directive (TPD).

Retailers expressed opposition in particular to plans to introduce plain, standardised packaging, to ban the display of tobacco products in shops, and to ban the use of cigarettes containing ingredients. “These measures will mean huge costs for retailers along with an explosion in black market, presenting a threat to more than half a million small retail businesses in the EU,” said Giovanni Risso, Chairman of the CEDT as well as President of the Federation of Italian Tobacconists. Retailers’ livelihoods are already suffering the impact of illegal cigarettes sold at low prices, with businesses closing down in some cases. Standardized packaging would make products even easier to counterfeit and banning ingredients would simply mean that smugglers would bring in the very products the EU seeks to ban from countries where they are allowed.

Czech businesses call for good governance and evidence-based regulations in all fields of business activity, including in what regards the revision of TPD. “Current discussions within the European Commission about TPD only target regulation of offer and limit free trade of tobacco products on the market. Such measures don’t limit consumption, on the contrary, they cause boost of illegal products of uncertain quality,” said Miroslav Toman, president of Federation of the Food and Drink Industries of the Czech Republic (FFDI).