The black market cigarette trade cost the public coffers some €10 million in uncollected tax revenue last year, with a report estimating that around 40 million cigarettes were bought illegally in Malta.
The report, about the illicit cigarette market in the EU, estimates that the number of cigarettes bought on the street in Malta decreased by 1.8 percentage points in the share of illegal trade from the previous year while lost taxes is estimated to have decreased by around €2 million.
The illegal share is 7.9 per cent of the total consumption.
The illicit cigarette trade cost EU economies €9.5 billion in lost taxes during 2019, a slight decrease over the previous year.
The KPMG Stella report revealed changes in patterns of counterfeiting and contraband cigarettes across European markets as states strengthen efforts to curb illegal inflows.
In all, 38.9 billion counterfeit and contraband cigarettes were consumed in the EU last year, continuing a downward trend of around 4.7 billion over 2018.
Illicit cigarette consumption went down to 7.9 per cent of total annual consumption. The findings suggest that anti-smuggling operations in the EU are successful in seizing around a tenth of all illicit cigarettes consumed in member states.
Figures show that the bulk of counterfeit and contraband cigarettes in Malta come from Italy and Bulgaria, with an estimated €5 million and €2.9 million worth of cigarettes coming from each country respectively.
Malta is mentioned as the country of provenance of illicit cigarettes found in the United Kingdom and France. The study shows that four in every five illicit cigarettes sold here are legally produced in another country but carry no country-specific labelling and are smuggled across borders to bypass tax regimes.
Four in every five illicit cigarettes sold here are legally produced
The study found that every young smoker in Malta aged between 15 and 24 who admitted to having bought illicit cigarettes said they obtained them from the street.
In fact, 57 per cent of all black market cigarettes are sold by street vendors, with two-thirds of adults, aged between 25 and 54, admitting that they bought their illicit sticks this way.
The global share, however, is lower than the combined average in the EU where street-selling of such cigarettes makes up 67 per cent of the total.
Malta outpaces other countries for illicit products bought at legitimate selling points for cigarettes. Just under a quarter of black market sticks are sold from authorised places in the EU as a whole while in Malta, 28 per cent are bought under the counter in ordinary shops and 21 per cent of purchases are made in restaurants or bars.
Eight in 10 Maltese smokers who opt for illicit cigarettes say that they do so because the product is cheaper than the legal one, with most of them saying that black market packets of cigarettes cost them between 30 to 50 per cent less than the regular price.
At the same time, however, less than a fifth of respondents in the study said they were confident that they were able to distinguish between legal and illicit cigarettes. By contrast, that figure in the EU rises to 31 per cent.
The younger generation in Malta feel they are the least likely to know whether a packet sold to them is legal or otherwise, with only 35 per cent of them saying they were confident they would be able to tell products apart. Just under half of the respondents in the older age groups said they would recognise cigarettes sold on the black market.
Loss of revenues to the state is the top worry among EU citizens, but the average across member states is 40 per cent.
Other major concerns for respondents in Malta include that the black market generates revenue for organised crime and that cheaper and more available cigarettes make it easier for young people to start the habit of smoking.