Egypt sees increased cigarette smuggling

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Factors that have contributed to the spike in the illegal cigarette brands include a deteriorating security situation across the country and a series of sudden and sharp taxes increases on legitimate cigarettes.

The Government of Egypt is still struggling to rebuild its economy which was negatively affected by the Arab Spring. The influx of illicit brands is leading to significant losses for the government in terms of lost taxes and duties.

Egypt sees increased cigarette smuggling
The influx of illicit brands is leading to significant losses for the Egyptian government in terms of lost taxes and duties – especially at a time when its struggling to rebuild the economy affected by Arab Spring. Photo-MoneyBlogNewz

According to the latest estimates, there are currently 40 to 50 different brands of illicit cigarettes in Egypt, as revealed by Sahar Labib, Head of Egypt Health Ministry, Tobacco Control Department. This is an official figure.

However, unofficially it is estimated that over a hundred brands of non-tax paid cigarettes are openly sold in the Egyptian market, which is contributing to the development of the illicit trade market in Egypt. The incidence of illicit cigarettes in the Egyptian market has grown significantly from an already alarming figure of 12.5 percent of the market in October 2011 to an estimated 20 percent today.

The news is disturbing to the Government of Egypt which is still struggling to rebuild its economy affected by the Arab Spring. The influx of illicit brands is leading to significant losses for the government in terms of lost taxes and duties.

The factors that have contributed to the spike in the illegal cigarette brands include a deteriorating security situation across the country and a series of sudden and sharp taxes increases on legitimate cigarettes.

Commenting on the situation, Ali Takish, Managing Director of Philip Morris Egypt said;

‘These cigarettes, which are illegally smuggled into Egypt without paying any taxes or duties, cost the Egyptian government an estimated EGP 4 billion pounds each year in lost tax revenues.”

In the attempts to effectively address this issue, the government needs to adopt a more prudent tax policy on domestic cigarettes, implement more effective border control measures, and strengthen law enforcement at the wholesaler and retailer levels.

Ali Takesh highlighted the alarming growth of the illicit trade in cigarettes – particularly in the last few months, saying;

‘Unless a comprehensive approach — including legislative and law enforcement — is adopted by the government to combat this phenomenon, the national tobacco industry remains at a great risk.”

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