Romania - cigarette smuggling decreased in March 2010..


April 26, 2010 - Cigarette smuggling has sharply increased since the Romanian government put extra taxes on tobacco last year. Tobacco companies claim one in three cigarettes are counterfeit or smuggled. Romania, which joined the EU in 2007, has among the cheapest cigarette prices in the 27-nation bloc -- roughly 2.50 euros ($3.40) per pack. (Romanian authorities arrest cigarette smugglers, Boston.com - Associated Press, 4/19/2010.)

In march 2010 smuggled cigarettes accounted for 33.9% of the total Romanian cigarette market in March, 2.3 percentage points less than in the first two months of the year, according to a study ordered by cigarette producers British American Tobacco and Japan Tobacco International.

The study, conducted by Novel Research, polled 2,500 people from across the country. In January and February this year, smuggled cigarettes accounted for 36.2% of the market, more than any single cigarette producer. The decrease in contraband is credited to the Government's measure to ban the sale of tobacco products in duty-free shops.

"The fact that contraband has decreased is a positive sign. Recent measures taken by authorities have been a blow to the black market and we estimate the two percentage points translate into about EUR20 million that go to the state budget, said Adrian Popa, Head of Corporate & Regulatory Affairs South East Europe British American Tobacco. "Still, smuggled products continue to account for a large market share both in profit and volume," he added.

Cigarette producers estimate the government will lose an estimated EUR1 billion (1.271 billion USD) in taxes and excises because of contraband cigarettes in 2010 alone.

The study shows cigarette smuggling is more of a regional rather than national phenomenon and occurs mostly in Romania's northeastern region. In fact, the study shows this is the only area to see an increase in illicit cigarette sale in March, from 52.8% to 59.5%, mainly due to products smuggled from the Republic of Moldova.

Contraband with cigarettes sold in duty free shops decreased an encouraging 6.4%, the study shows. The Government passed a decree effective as of early February, which limits the sale of cigarettes and alcoholic beverages in duty-free shops, in a move to crack down on illicit trade.

Reference: Cigarette Smuggling In Romania Down 2.3 Pcts In March To 33.9% Of Market, Mediafax.ro, 4/25/2010.

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