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Cigarette smuggling burns down the Greek economy

08 February 2016 / 18:02:34  GRReporter
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Over 4 billion illegal cigarettes are sold in Greece every year, according to the tobacco company "Papastratos." As estimated by the world information agency Bloomberg based on the tax of about 85 per cent for each packet of 20 cigarettes, even only the tax itself could bring annual revenue of 670 million euro. This amount is higher than the increase in the social contributions, which the government has planned and which has provoked major protests against the pension reform.

Fighting tax evasion has been one of the sharpest "stones" in the negotiations between Greece and its creditors since 2010, when it signed the first bailout package involving the euro zone and the International Monetary Fund.

Illegal cigarettes are sold in the very centre of Athens, from the parliament building to Omonia Square, for 12 euro for a carton of cigarettes. Some of them come from China, others from Egypt and Pakistan by sea, by "ghost ships" However, some local tobacco producers sell loose untaxed packages of tobacco leaf directly to manufacturers, even via the Internet. According to one ad on the web, the cost is 25 euro per kilogram.

Greece is one of the countries in the world with the highest number of smokers. According to a researcher from the Greek National School of Public Health, smoking in the country annually costs more than 3 billion euro. This amount includes the costs of hospital treatment to lost man-hours. Although cigarette prices in Greece are among the lowest in the European Union, over 20 percent of the tobacco products are imitations of branded products or are untaxed, according to a study on the topic.

According to the publication by Bloomberg, the same practices apply to alcohol and fuel. About 24 million litres of untaxed tsipouro are consumed in the country per year and the losses to the state funds amount to 200 million euro. More than 200 million euro per year is the loss from fuel smuggling, states the association of companies trading in petroleum products. At the same time, hundreds of thousands of Greeks play games of chance for the purpose through unlicensed companies, mainly on the Internet.

Discontinuing the smuggling of products for daily consumption, such as cigarettes and fuels should be a simple task, but the related policies are more complex, Piraeus Bank economist Ilias Lekos told the agency. "The fact that a large part of Greek society benefits from smuggling makes taking stringent measures extremely difficult," he said.

Tags: EconomyCompaniesSmugglingCigarettesAlcoholFuelTax evasion
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