Cigarettes: burning a hole in the public purse

How can you reduce the budget deficit without putting up taxes or cutting expenditure? One measure can do more than most to fill the depleted public purse – stop the trade in illegal cigarettes. Each year the smuggling of cigarettes into the UK costs the British Treasury over two billion pounds in lost revenue. The Romanian budget suffers in the same way. The good news is that Romania has scored some real successes this year in tackling this illegal trade.

At Constanta port last week I talked to customs officers about the efforts they are making to stop consignments of smuggled cigarettes from coming through the port. Many millions of cigarettes have been seized. Some of them were for sale in Romania. Others had health warnings in English on the packet, so were clearly destined for the UK market. Romanian customs officials have used new technology and the information provided by other countries’ law enforcement agencies to track suspect shipments and confiscate the cigarettes before they can reach consumers. Romanian law has also been changed to prevent the abuse of duty free shops for the smuggling of cigarettes. The result is that the share of the market which is accounted for by smuggled cigarettes has dropped in the last six months by as much as one third. This is something it took us several years to achieve in the UK.

We are developing a programme with Romania to work more closely together on this in the future, sharing experience at British ports and information on the smuggling routes. Cigarette smuggling is a big trade in a European market. It can only be tackled if European countries work together to stop the smugglers. That’s what’s happening in Romania. The butt stops here.