The share of the illegal cigarette market in Ukraine as of August 2020 increased to 6.9% compared to 6.6% in 2019, CEO of the tobacco company JTI Ukraine Paul Holloway has said, citing a Kantar study.
“This means that in the first eight months of this year, the national budget received UAH 4.5 billion less,” he said at a press conference at Interfax-Ukraine on Wednesday.
According to Kantar data, over the entire past year, the share of illegal trade in tobacco products in Ukraine was 6.6%, or 3.5 billion cigarettes. As a result, the national budget received UAH 4.7 billion less.
At the same time, in July 2020, Kantar estimated the volume of the illegal cigarette market in Ukraine at 5%.
As Holloway said, consumers spend about 25% of their income on cigarettes. Consequently, an increase in the price of cigarettes will lead to an increase in the illicit trade in cigarettes.
The CEO of JTI Ukraine said that legal business is losing market share in favor of illegal manufacturers and smugglers. Moreover, 75-80% of the cost of legal cigarettes are taxes, which the manufacturers of illegal cigarettes do not pay.
To fight the illegal tobacco market, the company launched the No Smuggling project, he said.
Acting Head of the State Fiscal Service (SFS) Serhiy Solodchenko said that in the first nine months of 2020, his service seized excisable goods for the amount of UAH 2.034 billion, of which about 36% in monetary terms were tobacco products.
During this period, the tax police seized 11.5 million packages of tobacco products and 164 tonnes of tobacco from illegal circulation for the amount of UAH 730.4 million. In monetary terms, this is almost twice more compared to the same period last year.