One in every five cigarettes smoked in Malta last year was counterfeit or contraband, a new study has found.
A report released by auditing firm KPMG said Malta had one of the highest rates of contraband cigarettes in Europe and grew by 70 per cent over 2015.
The black market cigarette trade was estimated to have cost the public coffers some €19 million in uncollected tax revenue in 2016, the report said.
Malta was also highlighted as being a transit country through which large quantities of illegal cigarettes passed.
Last week, Customs announced an extensive crackdown on the black market for contraband cigarettes, with anything from shops to band clubs and even private residences in officials’ sights.
In a statement announcing the anti-contraband operation, Customs singled out four brands of cigarettes commonly smuggled into the country: Business Royals, American Legend, Manchester and Tradition.
Anything from shops to band clubs and private residences are in officials’ sights
Two weeks ago, a court sent a smuggler to jail for six months and fined him €13,082 as part of an anti-smuggling operation.
And earlier last month, airport security officials seized 120 cartons (24,000 cigarettes) from a passenger arriving from Istanbul.
The KPMG report said that contraband cigarettes are genuine tobacco products that get illegally diverted into a market for which they are not originally intended, while counterfeit cigarettes are tobacco products manufactured without the permission of the trademark holder.
‘Illicit whites’ – cigarettes manufactured for the purpose of being smuggled and sold illegally elsewhere – were the main source of irregular cigarettes across Europe, the report says.
The KPMG report also highlights Malta as a major point of entry to other EU markets and says this could explain the increase in irregular cigarettes discovered on the island.
The brands targeted by local Customs officials were also mentioned in the report. It said they had no country-specific labelling and passed through Malta before being exported to countries with slightly more expensive tobacco.
The countries in question were mainly the UK and France, where the average price for a packet of 20 cigarettes stands at €8.86 and €6.76, respectively.
The local average price for a packet of cigarettes is €5.25.
The sale of counterfeit cigarettes is a criminal offence that carries with it harsh penalties from the confiscation of carrying vehicles to hefty fines and even imprisonment. The consumption of one single counterfeit or contraband cigarette carries a minimum fine of €250.
“Every euro in excise that is lost on contraband cigarettes is a euro stolen from government coffers that would otherwise have been spent on health, education, pensions and childcare,” the Customs Department said.