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Illicit cigarettes cost 1.6 – 2 % of total tax revenues collected by the government and Bulgaria considerably exceeds all other EU member states in this indicator. In relative terms, the losses suffered by Bulgaria are 3 times greater than in Romania and Poland, 10 times larger than in Germany and 16 times higher than in the Netherlands. Excise duties on tobacco products generated a revenue of BGN 1.8 B in 2014, which amounted to 44.5 % of all excise duties and 6 % of all budget revenues. This source of income provided 2.2 % of the country’s Gross Domestic Product (GDP).
According to a study conducted by AC Nielsen in 2014, the share of illegally traded cigarettes in Bulgaria was 20 %, with the trend being for it to slightly increase in the past three years. The uncollected tax revenues from the consumption of tobacco products amounted to BGN 450 M. This amounted to 2 % of total tax revenues collected in Bulgaria and 0.6 % of the country’s GDP in 2014. Bulgaria is the EU member state in which the taxation of tobacco products has the largest significance for the execution of the state budget.
The consumption of illicit cigarettes is unevenly distributed between the large Bulgarian cities. If the trade in illicit cigarettes in the ten most affected cities shrinks to the average for the country, the losses to the budget will decrease with ¼, which would amount to BGN 110 M additional revenues from excise duties and Value Added Tax (VAT). In order to tackle this problem, Bulgaria launched a national information campaign against the trade of illegal tobacco products.
The campaign is the joint effort of the Bulgarian tobacco holding Bulgartabac, the Finance Ministry , the Customs Agency and associations of tobacco producers. Its main slogan is “Don’t buy contraband! It’s harmful for everyone!”.
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