Over one in five cigarettes smoked in Belgium are untaxed by the Belgian state. Most untaxed cigarettes are either counterfeit ones made in illegal factories or imported from countries where cigarettes are cheaper.
Cimabel, the Belgian-Luxembourg Federation of Cigarette Manufacturers, conducted a study using discarded packets and cigarette butts found discarded in Belgium between 18 April and 9 May. The survey ultimately found that 21.8% of cigarettes consumed had escaped Belgian tax authorities, accounting for around €700 million in lost tax revenue.
The federation states that this is a growing trend. Compared to the previous semi-annual survey, last conducted in October 2021, the share of untaxed cigarettes has grown from 13.8% to 21.8%. This trend has been observed across the European Union, with the consumption of illicit cigarettes increasing by 3.9% in 2021, costing the EU €10.4 billion in lost taxes.
This increase, Cimabel believes, can be partly attributed to drastic tax hikes introduced on 1 April 2022, which has encouraged smokers to find cheaper ways of purchasing cigarettes. The group also believes that the supply of untaxed alternatives is also becoming easier to find in the country.
Of the 21.8% of cigarettes that escaped Belgian tax authorities, 1.9% were counterfeit and illegal. The remaining 19.9% were legally brought into the country from outside Belgium, notably in countries with a lower tax burden.
Cimabel believes that highly organised criminal gangs are smuggling cheap cigarettes from abroad to Belgium on a large scale and selling the below Belgian market price. Belgium, the group says, is now “flooded with cheap cigarettes from Bulgaria, Poland, and Turkey.”
Of the cigarettes purchased outside of Belgium, over half (51.8%) came from Bulgaria. Cheap cigarettes from Poland made up 7.8% of supply, Turkey 6.88%, and Romania 3.67% .
“The fact that these countries are not immediately popular tourist destinations reinforces the suspicion that organised networks exist that respond quickly and efficiently to the growing demand for cheap cigarettes by Belgian consumers who want to avoid the high excise duties at home,” Cimabel stated in a press release.
Belgian cigarette producers call to stop excise increases
Despite the high number of foreign imported cigarettes arriving into Belgium, Cimabel insists that the Belgian custom services were doing an “excellent job”, but accused the government of remaining “blind” to the reality of the illegal cigarette market.
“As long as the Federal Government continues to drastically increase excise duties on tobacco products each year, the demand for cheap cigarettes will continue to grow and criminal organisations will continue their illegal practices on Belgian territory,” the federation warned.
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The Belgian-Luxembourg Federation of Cigarette Manufacturers is appealing to the government to desist in proposing more “ill-considered increase in excise duties” which it believes only bolsters criminal organisations and does not lead to greater tax revenue.
The group laments that the government does not appear to be paying attention, instead pressing ahead with its new Federal anti-tobacco plan which envisages “a significant increase in the general price level and the elimination of the price differential between different categories of tobacco products.”
“In Bulgaria, they will be happy to read (this news),” Cimabel stated.