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Illegal tobacco imports to Russia increased six times

Why there are more and more counterfeit cigarettes in the country

Manufacturers of “leftist” cigarettes continue to impose their product on domestic smokers. The Federal Customs Service reported that last year it seized 17.4 million unmarked packs of cigarettes that foreign smugglers tried to bring into our country. The record figure was almost six times higher than that of counterfeit goods in 2020.

However, the Russians, who are craving smoke, are unlikely to be pleased with the zeal of the border service. Ever-increasing fiscal fees make legal tobacco products unaffordable for more and more citizens, while pirated tobacco costs half the price and is often as good as branded products.

Smugglers use an uncomplicated and proven method of transporting left-handed goods to the Russian market. We are talking about an interrupted transit scheme, when cigarettes for export, as it were, to third countries are unloaded in Russia and introduced here into illegal circulation at various outlets, the administration of which does not always pay close attention to studying the documentation accompanying the goods.

According to the Accounts Chamber (AC), over the past five years alone, the federal treasury has lost approximately 295 billion rubles due to the sale of cigarettes passing by the official registration. However, the actual amount of damage to the budget can be much higher. According to the director of corporate relations and communications of the Russian office of JTI Sergey Glushkov, the amount of seized counterfeit products last year amounted to only 1.5% of the total number of illegal cigarettes.

According to Andrey Loskutov, President of the Nicotine Alliance, the main reason for the growth of illegal tobacco products on domestic shelves is due to a noticeable discrepancy between fiscal rates for cigarettes in Russia and in the EAEU countries, primarily in Belarus, from which more than half of illegal tobacco products are supplied to our country. tobacco. Last year, the difference between taxes paid by Russian and Belarusian producers ranged from 39% to 50%, not in our favor. In such conditions, even with all the transportation costs and the risks of confiscation of goods by customs inspectors, it is more profitable for the Union Republic’s tobacco producers to sell cigarettes on the Russian market.

As Andrey Baturkin, auditor of the joint venture, stated earlier, the upward trend in taxation of the tobacco industry has been observed since 2008. The rate of increase in fiscal collections has always exceeded inflation and the increase in prices for basic consumer goods, however, did not seem too cruel “draconian” measures. However, in recent years, fiscal dynamics began to rapidly gain momentum.

For example, in September 2020, the State Duma adopted new excise rates on tobacco, providing for their growth by 20% in 2021 and gradual indexation to the level of projected inflation. Moreover, since July last year, minimum retail prices for nicotine products began to operate in Russia. Now the cost of a pack of cigarettes should not fall below 108 rubles, of which two-thirds are eaten up by taxes. “It is not surprising that due to the constant increase in excise taxes on legal goods, domestic smokers are increasingly turning to non-certified products,” explains Loskutov.

It is worth noting that the Russians have long been trying to save on a bad habit. According to the American analytical company NielsenIQ, in the first half of 2021, sales in the Russian market of cheap cigarettes costing up to 125 rubles per pack in physical terms increased by more than 10%, although over the same period in 2020, the growth in this segment was only 1.3 %.

“Smokers can no longer afford to buy legal tobacco products, since cigarette prices are constantly rising, and wage indexation against the backdrop of high inflation in the country is practically not felt. With such a set of factors, the counterfeit tobacco market will continue to exist and grow,” says BCS Express expert Andrey Mamontov.

The predictions of experts are as follows. Domestic law-abiding producers are unlikely to want to leave the profitability zone due to the increase in fiscal claims of the state and resume the trend to increase selling prices across the entire line of tobacco products. Therefore, the share of counterfeit goods in the near future runs the risk of growing by another 10-20% and it will become increasingly difficult for customs officers to catch fake cigarettes.

Source From: MK

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