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A similar problem exists in nearly all the EU member-states like Germany, France, UK, Italy and other West European states where street cigarettes sellers are immigrants from developing countries.
Center for Study of Democracy (2011), Dynamics of the Hidden Economy in Bulgaria and the Global Economic Crisis, Sofia: CSD.
Indications of property acquisitions exists in several sectors in the legal economy in Bulgaria, but also in a number of other EU member-states.
Center for the Study of Democracy (2010) ‘Examining the links between organised crime and corruption’. This study, carried out by CSD on behalf of the European Commission examines how organised crime uses corruption in EU-27. One of the seven country studies included in the report is on corruption and organised crime in Bulgaria.
Spain: Ministry of Interior (2010) Situacion 2009 – Crimen Organizado en Espana
Service de la Politique Criminelle, Rapport annuel 2007 sur la criminalité organisée en Belgique (2005–2006).
Unlike corruption affecting businesses and households, which is measured with diferent sociological methods, there are no widely accepted instruments for measuring the corrupt influence exerted by organised crime.
Law enforcement institutions in countries from the EU have adopted different definitions of the term “corruption”.
Center for the Study of Democracy (2007): “Organised crime in Bulgaria – markets and trends”, p. 39.
The tobacco industry uses as a basic category the number of pieces of cigarettes. Bulk tobacco is also measured in this category. Other measurement categories include the cigarette pack with 20 cigarettes per pack, the master box which contains 500 cigarette packs or 10,000 cigarette pieces, the standard container with 10 million pieces or 500,000 packs or 1,000 master boxes.
Between 2008 and 2010, the prices of midrange cigarettes in Bulgaria increased by 65 %–70 %.
This calculation is made by using the affordability ratio which measures the number of midrange priced packs of cigarettes that could be bought on a disposable monthly income.
Illicit whites are of low quality, and although they are legally produced their price is low.
The ‘empty pack’ method is used in the largest study of the illegal cigarette market within the EU which is conducted with the support of major cigarette producing companies. The method is based on collection and analysis of used empty cigarette packs in randomly selected areas in big cities.
This means that in 2008, 14 out of every 100 packs were without excise stamps and paid VAT, while in 2010 34 out of 100 were without paid duties. The percentage for 2010 is based on data from cities included in the 2007 survey. Counting the towns which were included in the additional survey due to the new sharp increase in consumption of illegal cigarettes in small towns and border areas, the percentage of illegal cigarette packs is 43.4 %.
These additional assessments take into account the shortcomings of the empty pack method which does not cover smaller towns and villages. They take into account the sharp fall in the legal market of about 19 billion pieces in 2008 to around 9 billion cigarette pieces in late 2011. According to retail surveys, the decline in consumption among the population above 15 years is 17–19 % for the period 2008–2011, as the decline affects both the number of smokers and average volumes of consumed cigarettes. This means that the entire cigarette market (legal and illegal) should be about 15.5 billion cigarette sticks, or a decrease of about 30 % in terms of cigarette sticks. According to an unpublished assessment of the National Revenue Agency, based on analysis of consumer surveys, the size of the illegal cigarettes market is closer to the levels indicated by the empty pack surveys.
The shuttle trade includes contraband of cigarettes through the western border of Bulgaria with Serbia and Macedonia, where excise duties are lower, smuggling of duty-free cigarettes purchased at the Turkish border, as well as small scale contraband from Greece. Although some elements of these contraband activities are organised, it can be assumed that there is no organised crime involved in this type of trade.
The 2011 seizures of illicit tobacco by the Ministry of Interior and the Customs Agency averaged 5 containers per month. However it is difficult to estimate the losses of criminal networks from these seizures, as part of the seized cigarettes were designated for external markets. According to a 2011 report by the Customs Agency, only one fourth of the illegal cigarettes seized by the agency are designated for the domestic market.
The starting point of this analysis is the difference between the quantities of cigarettes sold according to market surveys among retailers (known as retail surveys) and those for which official duties were paid according to the Customs Agency. The difference was about 2.1 billion cigarettes in 2011. Further analysis showed that approximately 1 billion pieces are ‘lost’ due to VAT fraud, and another 1.1 billion pieces are most likely on the move between distribution warehouses and retail outlets.
The estimate includes different types of distributors for which cigarettes are just one of their income sources, including those working in small stores, coffee shops, kiosks, taxi drivers in mid-sized towns, public and private sector employees who sell to friends and colleagues.
This includes illegal bulk tobacco which is estimated at 5–10 % of the consumption of illegal tobacco products.
The Greek hub has a long tradition in the provision of logistics for contraband imports of cigarettes of lead international brands into the Balkans since the early 1990s. The schemes range from duty free imports to entirely illegal methods such as the collection with boats of cigarettes thrown out in the sea from ships. The Greek hub is of European importance, as it supplies the largest illegal cigarette markets in Europe: the UK, the Netherlands, Germany and Central European countries.
Such cigarettes seized by authorities or detected in empty pack surveys usually bear a “duty free” stamp or non-Bulgarian language warning signs, indicating that they have been meant for export or actually exported and smuggled back in Bulgaria.
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Serious and organised crime threat assessment 2010–2011. Trends Organ Crim 15, 339–347 (2012). https://doi.org/10.1007/s12117-012-9166-0
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DOI: https://doi.org/10.1007/s12117-012-9166-0