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Belgium producing alarming amount of counterfeit cigarettes for illicit French market

Illicit tobacco trade
14:10 26/06/2022

Illegal cigarette factories in Belgium are making more and more counterfeit cigarettes, with a large quantity destined for the clandestine market in France. This is the finding of an annual study carried out by KPMG on behalf of cigarette manufacturer Philip Morris International, reports La Libre.

“The number of illegal cigarette factories in Belgium is increasing alarmingly,” according to the new study, which focuses on the consumption and flows of illicit cigarettes in 30 European countries. It says 17 factories were dismantled in the Benelux 2021, compared to seven in 2018. Clandestine workers were often found to be working in degrading conditions.

As the number of counterfeit cigarette factories decreases in countries like Poland, criminal gangs are shifting their activities to Belgium, historically a transit country. One reason for this is that criminal gangs want to operate closer to markets in France and Britain, with the ports of Rotterdam and Antwerp also playing a role, says the report.

"Belgian customs have done an excellent job in recent years, but there may still be many organised criminal gangs operating in Belgium," it says. Setting up an illegal cigarette factory costs around €800,000 in Chinese machinery, but the gangs recuperate this with the sale of a single container of cigarettes. Online sales are also an important part of their revenue.

A large amount of illegal production in Belgium is destined for France, partly due to the latter's high tax rate on cigarettes. Over the past few years, a pack of cigarettes in France has doubled in price. It’s why they experienced a "worrying increase in the consumption of illegal cigarettes of up to 29%", with a loss to the French public treasury of €6 billion in revenue in 2021, says the report.

The role of organised crime in illicit tobacco trade

“Forensic research shows that a significant proportion of counterfeit cigarettes in France were produced in our country,” the study states. "The worrying development in France leads to an increase in organised crime in Belgium."

On a positive note, it found that the consumption of counterfeit cigarettes was decreasing in Belgium, representing just under 5% of the total number of cigarettes on the market. The amount lost to the public treasury in tax revenue in 2021 was €100 million, a lower figure than in 2020.

But overall in Europe, the total consumption of illicit cigarettes increased by 3.9%, reaching 35.5 billion cigarettes across EU member states. This represents 8.1% of total consumption in the region.

There are fears of further escalations to the illegal tobacco trade in Belgium in the event of a sharp rise in excise duties leading to higher prices. "Excessive increases in the price of tobacco products lead to an increase in illegal trade and have no effect on the number of people who smoke," according to Philip Morris.

In order to maintain tax revenue, the tobacco company is focusing on the "smoke-free alternatives" it’s committed to bringing to market. "Smoke-free alternatives are less risky and can be an effective way to improve public health," it says.

Photo: Illegal cigarettes seized by Antwerp customs in 2021 © Belga/Tijs Vanderstappen

Written by The Bulletin