Romania - new strategy coming to cracking down on cigarette smuggling..

May 5, 2010 - British American Tobacco (BAT), the Romanian cigarettes’ market leader, as well as Japan Tobacco International (JTI) Romania and Philip Morris Romania had abrupt losses on the sales volume at the beginning of 2010. The BAT sales dropped by 15 – 17 %, and up to 40 % for JTI.

BAT, JTI and Philip Morris Romania firmly reject the idea of backing down from the local market, due to the latest increase of smuggling, and ask for dialogue with the authorities in the attempt to cut down on this phenomenon.

Directly related news brief:
Romania - cigarette smuggling decreased in March 2010..

The tobacco industry is one of the biggest state budget contributors. The three major companies provided the state with over EUR 2 billion in 2009, from VAT and other taxes.

Last year, the state confiscated more than 202 million smuggled cigarettes. One of three smoked cigarettes comes from smuggling; one of three cigarettes doesn’t pay state taxes.

The industry’s stakeholders took internal measures to fight smuggling. It seems these measures are not enough. Cigarette producers suggest the following measures in order to fight smuggling: Appointing an authority to coordinate the smuggling fight, preferably the National Customs Authority; Assigning resources for securing frontiers, especially those with the EU members; A better coordination between the fiscal and the monetary policy; Consolidating the industry-authority partnership.

Romania is not the only country facing this phenomenon. In the US, President Obama has recently signed a bill created (PACT) to stamp out tobacco smugglers, in an attempt to restore significant amounts of revenue lost because cigarette taxes are not being paid. In Ireland local Police cracks down on smugglers, as convictions for tobacco smuggling are up 100% at the end of March 2010. In Switzerland the World Health Organisation’s plan against tobacco smuggling is stalled over ways to trace products, duty free sales etc. The program would “Implement carton tracking in risk markets.” Examples on efforts to cut down smuggling could continue.

In Romania, in March 2010, the Official Monitor announced a new national strategy to fight cigarettes smuggling was to be implemented in 45 days. The Government formed a Work Group that would prepare the national strategic plan for fighting the illegal cigarettes traffic in the next two years. This order was also published in the Official Monitor. According to this document, ANAF will coordinate the new structure, which will include members of the National Customs Authority, the Financial Guard and of the police.

Fight against smuggling should go on with determination, as Romania loses EUR 1 bln every year due to this phenomenon. Romania needs that billion. With a fragile economic balance, Romania has gone further into a financial crisis due to the recession. One of the result was the country had to borrow more and more from the IMF. The story continues to get impressive media coverage whenever Romania has to pay a new part of its debt.

Reference: Cracking down cigarette smuggling would get Romania EUR 1 bln. Romania needs that bln! by: Nine oClock, Nineoclock.ro, 5/4/2010.

Some Romania related news briefs:
Romania - cigarette smuggling decreased in March 2010..;
Romania - PMI suspends cigarette production for two-weeks starting February 19th..;
Romania to increase excise tax on cigarettes April 1, 2009..;
Congratulations are in order: Netherlands, Romania & Alberta..;