Greek government losing revenue battle

As the Greek government continues to raise tobacco-products taxes as part of the austerity measures demanded by international lenders, it is having to expend more effort on trying to stem the growing tide of the illicit trade in cigarettes, which is being boosted by those tax increases.

According to a story by Andy Dabilis for the Greek Reporter, the government has raised tobacco taxes by more than 20 per cent since the economic crisis began in 2009, and recently announced that another five cents were to be added to the tax charged on a pack of cigarettes.

Austerity-stricken Greeks are responding by increasingly turning to illicit cigarettes that are typically sold for half the price of licit cigarettes.

The government estimates it is losing about €700 million annually to the illegal cigarette trade and the finance ministry said tobacco revenues had decreased by 11 per cent during the past two years to €2.7 billion.

Ilias Asimakopoulos, the chief executive of JT International Hellas, was quoted as saying the illegal cigarette trade had captured more than one-fifth of the local market; so about 4.7 billion illicit cigarettes were entering the Greek market every year.