Croatia loses 173 million euros a year from the illegal trade in cigarettes and tobacco

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ZAGREB, 8 May 2022 – Croatia lost HRK 1.3 billion (€173 million) in budget revenue from the consumption of illegal cigarettes and cut tobacco in 2021, according to a survey by the Croatian Association of employers (HUP) in cooperation with the market research agency Ipsos shows.

The purpose of the survey was to determine the size of the untaxed tobacco market and its impact on the national economy. It was carried out in December 2021 and January 2022 on a representative sample of 1,243 households, including 3,062 respondents aged 19 and over.

The survey showed that 27.9% of the population aged 19 and over smoke, of which 21.4% smoke cigarettes and 7.5% cut tobacco. Over the past three years, despite rising prices for tobacco products, this incidence has remained stable.

“According to the survey, the share of untaxed tobacco products is 19% at the annual level and this mainly represents untaxed cut tobacco,” said HUP Chief Economist Iva Tomić, adding that the rise in price drives people to buy unstamped tobacco products.

“Although this trend has been decreasing since 2019, a relatively high level of illegal products is still present, which has considerable economic and social implications, for budgetary revenues, rising crime, public health services, declining jobs, etc.,” Tomić said.

In 2021, revenue from excise duty and VAT on tobacco products amounted to almost 8 billion kuna, or 8% of total tax revenue. However, due to the consumption of untaxed tobacco products, the government loses HRK 1.3 billion per year.

Tomić said that state institutions are making considerable efforts to combat the illegal trade in tobacco products, introducing a product traceability system, increasing seizures of these products, limiting the import of tobacco products from from non-EU countries to two packs per person and imposing restrictions. on raw tobacco.

“A good regulatory and fiscal environment is crucial for business stability and is in the interest of all tobacco market players,” Tomić said.

(1€ = 7.5 HRK)

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