The illicit trade numbers in Europe are telling us that something needs to change 

The latest KPMG report in Europe paints a troubling picture: More than 52 billion illicit cigarettes were consumed in the continent in 2023, the highest number since 2019. Of those, 35.2 billion were consumed in the European Union (EU). 

Across the EU, in 2023 alone, this has caused governments the loss of an estimated EUR 11.6 billion in tax revenue. And, if we take into account the past five years, revenue losses in the region now amount to a shocking EUR 49.1 billion. 

What does this financial drain mean to the hard-pressed European economies? Governments are being robbed of much-needed resources, that’s for sure. To put things in perspective, EUR 11.6 billion lost in just one year is more than three-quarters of the EU’s entire security and defense budget from 2021 to 2027 or, for example, almost a full year of EU research and innovation funding under the “Horizon Europe” program.  

Ultimately, as is always the case, it’s the people that are mostly impacted by illicit trade. 

Millions of adult smokers are falling prey to the illicit cigarette trade, while criminal organizations gain even more power and contribute to the derailment of smoking cessation policies. Society as a whole—with purchasing power struggles on the rise and an inequitable cost of living crisis—is paying a high price, as illicit trade has a direct impact on people’s lives across Europe: It fuels ruthless criminal gangs, often impacting the most vulnerable communities and populations. As it deprives governments of vital tax revenue, it hurts public services and safety, too.  

Let’s put this in practical terms, once again:  

In 2023, France saw tax revenue losses of more than EUR 7 billion due to illicit cigarette consumption. Eliminating France’s black market for cigarettes would pay for almost 5 percent of the country’s budget deficit, or a EUR 1,272 salary boost for each public sector worker. 

This goes to show that fighting illicit trade can bring a tangible, positive impact for people, communities, and entire countries. Unfortunately, traditional tobacco control policies aimed at fighting illicit trade and, overall, reducing smoking prevalence, are not doing enough. Have policymakers lost sight of what they need to prioritize the most?  

People, first and foremost, need to be front and center of policymaking.  

The recommended approach 

Effective law enforcement is, and always will be, a key component in the fight against illicit trade. It should be the cornerstone of any strategy to curb the black market affecting our communities. Recently, we have seen massive raids and seizures in Europe that have brought down criminal networks dealing with illicit cigarettes. However, these efforts will continue to be insufficient if they are not accompanied by right, fair, and balanced policies. An impactful policy approach is one that considers the consumer’s purchasing power, needs, and preferences, instead of focusing on aggressive taxation schemes that may transform legal markets into illegal ones, with almost zero impact on smoking rate declines or tax returns. 

Governments must be relentless against organized crime profiting from illicit trade in tobacco products. They must consider a holistic approach that includes deterrent penalties, awareness-raising campaigns about the real-life impact of illicit trade, as well as reasonable fiscal calendars and tax levels on legitimate products. 

An April 2024 Povaddo survey, commissioned by Philip Morris International, sheds light on what Europeans feel about the right approach to policymaking, too. 74 percent agree that governments must consider illicit trade as an unintended consequence when deciding how to regulate and tax tobacco- and nicotine-containing products.   

Now is the time to act

The illicit trade numbers in Europe should serve as an eye-opener: Governments have a duty toward their constituents and must look into implementing innovative and long-lasting policies that aim to make all cigarettes a thing of the past—both legal and illegal ones. 

Regulators need to address the problem of illicit trade head-on. We cannot afford the cost of continuing to rely on traditional tobacco control policies alone.

Italy, Romania, and Spain are some of the countries that have embraced a tobacco harm reduction approach and, at the same time, incorporated best practices on countering illicit trade. In such a regulatory environment—with the coexistence of illicit cigarette consumption coming down and governments enabling an expansion of smoke-free products—it is possible to see a long-term positive impact on smoking prevalence reduction. 

The recipe for success is right there in front of us. Let’s not turn this into a missed opportunity for public health.