PMI Shares KPMG Report on Social Media: EU Illicit Cigarette Consumption Rises 20% as Prohibitive Policies and Excessive Taxation Fuel Black Market

Key Points:

·Release Platform: Philip Morris International (PMI) shared data from a KPMG report on social media, warning that illegal cigarette consumption in the European Union increased by 20.2% compared to the previous year, resulting in a tax revenue loss of 14.9 billion euros (about $15.9 billion). 

·The report suggests that prohibitive policies may be fueling the growth of the black market, emphasizing the need for a balance between regulation and reasonable taxation. 

·Proposed solutions include evidence-based regulatory systems, enhanced cross-border law enforcement cooperation, and nationwide awareness campaigns on the dangers of illicit tobacco trade. 

·The company called for coordinated governance among government entities, businesses, and social organizations to combat illegal activities, urging global collaboration to address illegal trade networks. 

【2Firsts News Flash】On June 26th, Philip Morris International (PMI) released a statement on its official LinkedIn page, expressing concern that the escalating illicit tobacco trade poses a serious threat to global public health safety and the realization of a "smoke-free future." Quoting the latest KPMG report on illegal cigarette consumption in Europe, which revealed a significant 20.2% increase compared to the projections for 2023, PMI urged for a comprehensive and pragmatic approach from all sectors to address the issue.

According to a report from KPMG cited by PMI, the issue of illegal tobacco consumption in EU member states is expected to worsen by 2024. Key data revealed in the report includes:

Enormous Illegal Market: Within the European Union alone, the consumption of illegal cigarettes reached a staggering 389 billion units in 2024.

Counterfeit products surge: Compared to 2023, the consumption of counterfeit cigarettes has increased significantly by 20.2%.

Huge tax losses: EU governments estimated to lose up to 14.9 billion euros in tax revenue due to illegal cigarette trade, a significant increase from 11.6 billion euros in 2023.

PMI emphasizes in its statement that illegal trade not only exposes consumers to the risks of substandard, unregulated products, but also deprives the government of important revenue that could be used for national defense and social welfare projects. Particularly concerning is that the profits from illegal trade have become a significant source of funding for organized crime groups, fueling other serious criminal activities.

The company pointed out that research in KPMG's report found that strict bans and excessive taxation policies implemented by some countries often fail to achieve the intended results. Instead, they may actually increase black market activity and lead to a rise in violent crimes related to smuggling.

For this reason, PMI believes that addressing this complex issue requires a set of more intelligent and comprehensive strategies. The company has proposed four key pillars for a solution:

• ·Empirical regulation: Establish evidence-based rules and a predictable tax system to reduce the attractiveness of the black market.
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• ·Robust law enforcement: taking stricter legal sanctions and enforcement actions against criminals.
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• ·Public-private partnership: Encouraging the sharing of intelligence and resources between the government and private sector to create a united front in combating (or fighting) crime.
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• ·Consumer education: Increasing public awareness of the dangers of illegal products.

PMI reiterated its corporate mission of replacing traditional cigarettes with scientifically proven alternatives, ultimately aiming for a "smoke-free future." The company stated that in order to achieve this goal, eliminating illegal trade is crucial.