Increased cigarette smuggling is burning a hole in the Treasury's coffers

The legal market for cigarettes is shrinking says the Union of Employers of Distributing Companies (ZPPD), representing companies controlling 65% of the cigarette market. They believe the drop in sales is due to increased excise duties, which increased by 27.3% last year, and this year have increased by a further 33%. Analysts estimate that every tenth box of cigarettes is illegal. Budget losses amounted to zl. 730 million last year. However, the excise duty has to be increased by a further 10% in order to comply with European Union (EU) rates, which are 57%. ZPPD says that too rapid an increase may increase smuggling, as the price gap between Poland and its neighbors increases. ZPPD estimates that revenue to the Treasury may not be as high as expected and instead of zl. 7.9 billion it may only receive zl. 6.2 billion in 2000, and zl. 7 billion instead of zl. 10.5 billion in 2001. ZPPD may be forced to reduce its workforce. (Prawo i Gospodarka, page 10) M.M.