Concerns Rise Over Potential Black Market Surge in Cigarette Sales

The tobacco industry is raising alarms over a proposed tax increase on cigarettes that could exacerbate the black market for tobacco products in Germany. The European Commission has suggested raising the minimum tax on cigarettes from 90 to 215 euros per 1,000 cigarettes, which could lead to a significant price hike for consumers.

Currently, a pack of brand-name cigarettes costs around 8.50 euros, but this could rise to over 12 euros, prompting many smokers to seek cheaper alternatives through illegal channels. The impact is expected to be even more pronounced for rolling tobacco, where the tax per kilogram is proposed to increase from 60 to 215 euros.

At the ongoing Intertabac trade fair in Dortmund, industry representatives expressed strong opposition to the proposed tax hike. They argue that weakening the legal market will inevitably strengthen the illegal market, with one industry spokesperson likening the situation to "a stimulus package for criminal networks."

Countries like the Netherlands and France, which have already implemented tax increases, have witnessed a sharp rise in cigarette prices and a corresponding increase in the black market. In the Netherlands, the average price for a pack of 20 cigarettes has surged from 7 euros in 2019 to 13 euros today. In France, prices have climbed from 8.60 euros to 12.50 euros.

A study by Dutch customs authorities reveals that only 55% of the cigarettes smoked in the Netherlands are taxed within the country, with 30% bearing foreign tax stamps and 10% being counterfeit. In comparison, Germany estimates that about 20% of cigarettes consumed are not taxed domestically.

For the few remaining cigar manufacturers in Germany, the proposed tax increases pose an existential threat, with potential tax rates increasing more than tenfold. One industry representative described the situation as a "campaign of destruction" against their sector.

Proponents of the tax increase argue that raising prices on tobacco products is a necessary public health measure. Experts from the German Cancer Research Center assert that higher prices are effective in preventing youth smoking initiation and encouraging current smokers to quit.

However, industry representatives counter that smokers may continue their habits but switch to cheaper, illegal products. They highlight the dangers of unregulated cigarettes, which may contain harmful substances that have not been tested for safety.

The German government heavily relies on tobacco taxes, collecting about 20 billion euros annually from tobacco sales. However, industry representatives are skeptical that increased taxes will boost government revenue, citing examples from the Netherlands where tobacco tax revenues have declined significantly since price hikes.

The German Customs and Financial Union warns of a rising trend in illegal tobacco trade, with smugglers treating Germany as a lucrative market. Calls for proactive measures to combat tobacco smuggling have intensified, emphasizing the need for better resources and technology for customs enforcement.

Overall, the proposed tax increases have sparked a heated debate about the balance between public health initiatives and the potential for a thriving black market.