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Thriving alcohol smuggling

28 September 2015 / 16:09:56  GRReporter
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Alcohol smuggling in Greece already has become a scourge for the market and government revenues. Currently, this may be the only thriving activity in the country.

According to sources in the market, the illegal sale of alcoholic beverages has already reached uncontrollable proportions. Furthermore, they believe that this phenomenon will increase even more if Greece accepts the terms of the European Commission to increase the excise duty on the local spirits tsipouro and tsikoudia (kinds of brandy). A large number of consumers in Greece have recently turned to these drinks, because they are more affordable due to the lower excise duty compared to other alcoholic beverages.
 
However, this could soon radically change. On Thursday, the European Commission asked Greece to change the tax regime on tsipouro and tsikoudia consumption, as the excise duty imposed on these drinks by the state is only 50% of the standard on ethyl alcohol.

According to the European Commission, the excise rate imposed by Greece on both alcoholic beverages is too low. When they are produced in bulk by the so-called traditional stills (wine producers or producers of other agricultural products), the rate is even lower and does not exceed 6%.

As the same sources indicate, the increase in taxes on those two drinks can balance the taxation of alcoholic beverages but it will cause growth of smuggling, and another consumer "leakage" towards illegal alcohol.

Branch research by the Institute for Economic and Industrial Research estimated the smuggling in alcoholic beverages in the country at 8.2 million bottles, the illegal sale of tsipouro in particular amounting to over 10 million litres (84% of total sales of tsipouro).

In 2014 alone, the loss of tax revenue from illegal alcohol production, import and sale amounted to 130 million euro, becoming as high as 300 million euro, if it included the lost profits from the illegal sale of bulk tsipouro.

Today, when the VAT amounts to 23% and the special consumption tax on alcoholic beverages has been increased by 125%, the amount of taxes represents 82% of the retail price of alcoholic beverages. Because of these increases, Greece ranks first in the Balkans in terms of the special consumption tax rate on alcoholic beverages, fifth in Europe of the 28 and first if the disposable income of Greeks is taken into account. This in turn leads to thriving cross-border smuggling, in view of the enormous profit opportunities.

Tags: SmugglingAlcoholTsipouroTax ratesEuropean Commission
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