Currently the average retail price of a 20-pack of cigarettes is HUF 1,119, of which 75 percent consists of excise duty and value-added tax, meaning that any tobacco products sold by circumventing taxation yield a huge profit margin to organized crime groups. And Hungarian excise duty has yet to reach the minimum 60 percent of retail price required by the European Union.
NAV said that in the first month they seized HUF 1.8 billion worth of cigarettes from smugglers and the biggest single source were the so-called “sherpa”, carrying the loads in huge backpacks across the borders.
Bootleg cigarettes come from several sources: first, legally produced and sold cigarettes in Ukraine – where the excise duty is significantly lower – are smuggled into the country. Second, workers of many legally operating cigarette factories in the Ukraine, Serbia and Romania run “black shifts” at night, producing extra batches of big brand cigarettes. Third, there are also complete production lines established illegally – last year Hungarian police shut down such a facility ran by a Romanian and operated by locals in southern Hungary.
Title image: MTI