The illegal cigarette market can grow in 2,5 times

Нелегальный рынок сигарет может увеличиться в 2,5 раза

The fight against monopoly in the market of excisable goods can lead to an increase in smuggling.

If the tobacco producers and the state will not compromise regarding the “tobacco” changes in the Verkhovna Rada adopted the bill number?1049, illegal circulation of cigarettes can reach 20% in the short term. Such opinion in conversation with expressed analyst at Pro-consulting Ivan Shpak.

“According to the Ministry of economic development, trade and agriculture, the shadow market of alcohol in Ukraine since 2007, has grown from 10% to 55%. According to our estimates, up to 70%. Increase the black market occurred against the backdrop of an annual growth of excise duties, minimum prices for alcohol and reducing the official production of alcohol. The tobacco market is partially possible to observe a similar situation. Now the share of black market cigarettes is in the range of 6-8% over the past year it has doubled. The introduction of a bill 1049 may increase the share of the black market up to 20% in the short term,” – said Shpak.

The share of black market cigarettes in Ukraine is still quite low relative to other sectors of the economy, the expert said, however, the situation may change.

“Especially with the illegal export to EU countries where the price of a pack ten times higher than in Ukraine”, – he added.

To resolve the situation dialogue between the government and the 4 largest tobacco companies: Philip Morris International, Imperial Tobacco, British American Tobacco and Japan Tobacco.

Earlier, Prime Minister Alexey Goncharuk has already expressed its intention to hold a meeting with the tobacco companies, noting that the Cabinet has nothing to do with the controversial revision of the trading margin on tobacco products. Prior to this, British American Tobacco and Japan Tobacco withdrew a large consignment of tax stamps and asked her to return paid for them and 505 350 million. respectively. Such a decision in the companies was explained by the reduced production due to the announced regulation of the level of profitability of the tobacco market. Thus the main objective of the legislative changes was the elimination of the monopoly position of the company “Tedis” – the main distributor of tobacco products on the Ukrainian market for 4 major foreign companies.

“The issues related to the monopolistic position of the company “Tedis”, should solve the Antimonopoly Committee of Ukraine, by the imposition of fines or the forced separation of the company. The possible penalties for the company “Tedis” and the four tobacco companies may exceed 10 billion UAH. but on October 3 the district administrative court. Kiev has banned the Antimonopoly Committee of Ukraine to impose a fine on tobacco manufacturers and company “Tedis” prior to consideration of the claim on violations of procedural violations. To all this was added the bill number 1049, limiting the margin for the distributor and the seller. In this case, the fines the AMC bill has created is not the effect, which is expected to resolve the current situation. If this struggle with a monopoly position, this is clearly not the most effective kind of struggle,” concluded Ivan Shpak.