Key Takeaways
- One in ten cigarettes produced illicitly or smuggled in the EU.
- Illicit manufacturing has overtaken smuggling as the primary issue.
- Tax revenue loss estimated at €13 billion annually.
The European Court of Auditors (ECA) has reported a significant increase in illicit cigarette manufacturing across almost every EU state, with one in ten cigarettes produced illegally or smuggled. This surge in illicit activity is causing substantial financial losses, with an estimated €13 billion in tax revenue lost annually.
According to the ECA, the illegal trade in tobacco has 'changed significantly' in recent years, with smuggling no longer being the predominant issue. Instead, illicit manufacturing has become the primary concern, growing dramatically within the bloc.
The report highlights the involvement of organised crime in driving this illicit activity, noting that these factories operate without proper regulation and oversight, leading to a proliferation of counterfeit and substandard products.
The ECA's findings suggest that the rise of illicit manufacturing is due to the ease of setting up such operations, often in areas with weak regulatory enforcement. These factories can produce large quantities of cigarettes at a fraction of the cost of legitimate manufacturers, making them highly profitable for criminal networks.
The surge in illicit cigarette production has serious implications for public health, as these products are often of poor quality and may contain harmful substances. This poses a significant risk to consumers, particularly in regions where the illegal trade is most prevalent.
The ECA recommends increased cooperation between EU member states to combat the rise of illicit manufacturing. This includes enhancing border controls, improving regulatory frameworks, and strengthening law enforcement efforts to dismantle these criminal networks.
The report also calls for greater transparency and traceability in the tobacco supply chain, which could help reduce the incidence of illicit manufacturing. However, implementing these measures will require significant investment and coordination among EU countries.
The financial impact of this illicit trade is substantial, with the bloc losing billions of euros in tax revenue each year. This loss not only affects government coffers but also undermines efforts to fund public services and infrastructure projects.
