Croatia loses 173 million euros a year to illicit cigarette and tobacco trade
According to a survey conducted by the Croatian Employers' Association (HUP) in cooperation with Ipsos Market Research, in 2021 Croatia lost 1.3 billion kuna (173 million euros) in budget revenue due to illicit cigarette and cut tobacco consumption.
The purpose of the survey is to determine the size of the duty-free tobacco market and its impact on the national economy. It was conducted in December 2021 and January 2022 on a representative sample of 1,243 households, including 3,062 respondents aged 19 and older.
The survey shows that 27.9% of the population aged 19 and above are smokers, of which 21.4% are smokers and 7.5% are cut tobacco. Over the past three years, this incidence has remained stable despite rising tobacco product prices.
Iva Tomić, chief economist at HUP, said: According to the survey, the annual share of untaxed tobacco products is 19%, which is mainly untaxed cut tobacco. Higher prices are pushing people to buy unstamped tobacco products.
"While this trend has been declining since 2019, there are still high levels of illegal products, which have considerable economic and social implications for budget revenues, rising crime rates, public health services, declining employment opportunities, and more." Tomic said.
In 2021, excise and value-added tax revenue from tobacco products is close to 8 billion kuna, or 8% of total tax revenue. However, the government loses 1.3 billion kuna annually due to the consumption of duty-free tobacco products.
Tomić said state agencies have done considerable work in combating illicit trade in tobacco products, introducing product traceability systems, increasing seizures of such products, limiting the import of tobacco products from non-EU countries to two packs per person, and imposing restrictions efforts regarding raw tobacco.
"A sound regulatory and tax environment is critical to business stability and is in the interest of all tobacco market players," Tomic said.
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