Illegal Tobacco Trade in Russia: Expert Discussion with Sergey Ryabukhin

Sergey Ryabukhin, the First Deputy Chairman of the Russian Federation Budget and Financial Markets Committee, participated in an expert discussion on the topic of "Estimating the Scale of the Illegal Tobacco Trade in Russia, the North Caucasus, and the Southern Federal District." The discussion was part of the business program "North Caucasus Retail Day" and took place via video conference mode at the event location in Mahachkala.

Attendees discussed methods to curb the illegal distribution of tobacco products during inspection suspensions, priorities for cracking down on illicit trade, and the incentive measures that should be taken in different regions to combat this phenomenon.

During his speech, the senator discussed the idea of transferring a portion of the revenue from tobacco product consumption tax to the budgets of the Russian Federation's regions.

Various regions now require additional sources of income more than ever before to fill their budgets. Therefore, we suggest transferring a portion of the tobacco consumption tax revenue to the federal budget. Currently, a transfer rate of 15% is possible, which will further increase in the future. Additionally, a new program should be established based on retail data for tobacco products to include this revenue. This was stated by Sergey Ryabukhin.

According to the senator, this proposal would enhance the interest of local authorities in cracking down on illegal tobacco sales. "At the same time, we need to review the powers of these regions to ensure that they have sufficient control," the senator noted.

According to a senator, Russia's illegal tobacco market share reached 12.9% in the fourth quarter of 2022, equivalent to over 1.4 billion packs of cigarettes. This means that in Russia, one out of every seven packs of cigarettes is illegal.

Sergey Ryabukhin stated that transferring a portion of tobacco consumption taxes to the local level will enhance the control of the entire tobacco market in the country and effectively counteract the existence of illegal markets. This will clearly benefit the public finance, manufacturers, and consumers.

The discussion also invited Vladislav Zaslavsky, the Director of the Department for Commodity Digital Marking and Legitimization of Product Movement at the Russian Ministry of Industry and Trade, as well as representatives from federal authorities, public organizations, and the business community.