From whatever angle you look at it, smuggled and counterfeit cigarettes are a big problem: in terms of lost revenue from evaded taxes, the main European countries lost around 16.7 billion euros in 2023 alone, money that they could have used for useful services to citizens or to better keep their shaky accounts standing; consumers, meanwhile, have turned to a gigantic illegal market, which last year handled 52.2 billion pieces.
Then there is the issue of a further increase in health risks, because many of these products escape any quality control, are made in makeshift factories, in terrible hygienic conditions, with minimal or no protection for workers. These are some of the data and reflections that inspire the substantial report by the KPMG company, referring to last year and dedicated to the illicit consumption of cigarettes in 38 nations of the Old Continent. Photography is a phenomenon that is getting worse: compared to 2022, the growth in quantities transiting on the black market was 3 percent, corresponding to 1.5 billion pieces. Missed tax collections rose by 8.1 percent: we are talking about 1.3 billion euros of additional revenue lost. «In this way, moreover, the activity of criminal organizations engaged in drug and human trafficking is fueled. It’s right to be worried” observes Christos Harpantidis, senior vice president of External Affairs at Philip Morris International, the company that commissioned the report from KPMG.
Panorama meets him in Brussels, after the press conference presenting a document that raises the alarm at both national and community level. If we consider the 27 EU member states alone, the tax shortfall is around 11.6 billion euros. «It’s impossible to look the other way. And it is reasonable to hope that the next European directives dedicated to this sector take into consideration the reality of the market, the repercussions on citizens, the stability of the finances of the Union and its members. We expect open, transparent decisions, distant from any ideology.” These are not abstract concepts, vague purposes, because a barrier to crime exists and finds a reference model in our home, in Italy. Scrolling through the report, arriving at page 114, we read how throughout the country the consumption of contraband and counterfeit products has more than halved in five years, falling from 3.9 percent in 2019 to 1.8 percent in 2023 The loss in taxes last year was 219 million euros, equal to 69 million euros less compared to 2022. «Italy is making the right choices, it has addressed the issue with the right mentality and an effective method” comments Harpantidis.
Luigi Scordamaglia, CEO of Filiera Italia, an association that promotes the protection of our agri-food supply chains in national and international contexts, intervenes to illustrate our country’s strategy: «We managed to bring together the farmers of Coldiretti, the extreme innovative capacity, both technological and approach-based, of Philip Morris, plus the association of Italian tobacconists». Favoring the same dynamic: «Ensuring a fair distribution of value, the sharing of extremely rigid rules and technological control platforms». A collaboration was created between the public and private sectors, which involved the Ministry of Agriculture and was renewed in 2023, putting on the table investments amounting to 500 million euros for five years: «There can be no fight against the illicit without due recognition of the work of each party.”
The encouraging numbers have also changed attitudes of citizens towards the black market: «In the sector of illicit tobacco consumption» Scordamaglia underlines «there was the perception that tax evasion could be a minor problem, almost a cunning. This is not the case, because on the one hand organized crime is promoted, on the other it massacres a supply chain that guarantees over 41 thousand jobs.” Despite the excellent Italian numbers, the example was not followed by neighboring France, where they opted instead for particularly heavy taxation, equal to almost double the European average. As a result, smokers have turned en masse to the illegal market: in the KPMG report we read how the consumption of illicit products has skyrocketed to 33.2 percent in 2023, compared to 13.7 in 2019. “I cannot understand,” Harpantidis criticizes, “how France can not consider a loss in terms of taxation of more than 7.2 billion euros in a year.” A figure which, alone, could have almost entirely covered the public contribution to the last Paris Olympics. Adopting rational measures is not the only way to reduce the consumption of counterfeit and contraband cigarettes. At the same time, there is the opportunity offered by the latest generation products, which are technologically advanced and therefore more difficult to reproduce: «Provided, of course, that differentiated regulation is introduced, which takes into account the specific differences of the different product categories. In this area, Sweden’s policies lead the way.” In general, Harpantidis’ invitation to individual governments and European institutions is only one: «Do not deliberately ignore the data provided by science and the numbers of illicit trade. Promote collaboration between the public and private sectors, understand the problem, put the necessary energy and adequate resources into solving it.”
