Government admits to slide in revenues as illegal tobacco sales soar

During the first quarter of 2001, tobacco companies reported a net loss of zl.12.9 million, compared to a gain of zl.115 million last year. It is estimated that about 20 billion cigarettes were illegally imported in the first half of this year. This situation is a result of a drop in legal sales, which in turn, was caused by an increase of excise tax on tobacco. The Finance Ministry justified the increase, claiming that it needed extra revenue. However, the result shows the move was counter-productive. Last year, excise taxes on tobacco made up 6.7% of the state revenue, whereas the year before it had been 7.4%. (Prawo i Gospodarka, p. 3) M.D.K