Tax hikes on cigarettes and alcohol to encourage smuggling, tradesmen union says

Neşe Karanfil ANKARA

DHA Photo

The recent rise in fixed tax from cigarettes and alcohol over the inflation rate will encourage smuggling, the head of the Confederation of Turkish Craftsmen and Tradesmen (TESK) Bendevi Palandöken has said.

Cigarette counterfeiting and smuggling have risen in recent years and the latest tax raises should be suspended to maintain the fight against such illegal activity, Palandöken warned in a written statement on Jan. 2

“The latest tax increase on cigarettes will cause a rise in prices, resulting in a dramatic increase in smuggling. This will pave the way for one in four cigarettes being smuggled in the near future, raising from one in five cigarettes at present. Every price increase ends with a rise in smuggling, unfortunately, causing harm both to people's lives and the state’s budget, as well as to small tradesmen’s income … In order to prevent these effects, the raise needs to be suspended,” he added.

The tax rate in tobacco products was kept at 64.25 percent, with the minimum fixed tax rate increasing by 5 percent to 0.19 Turkish Liras to mark the New Year.

The fixed tax rate for beer, which was 0.74 liras per liter, has been increased by 15 percent to 0.85 liras. The fixed tax rate for wine has been increased by 16 percent to 4.59 liras, and for sparkling wine by 16 percent to 31.02 liras.

The total number of smuggled cigarettes jumped to 16.3 percent of total sales in 2010 and 19.6 percent in 2011. Although the share of smuggled cigarettes decreased to 15.3 percent of total sales in 2012, it rose to 19.6 percent of total sales in 2013. The share of smuggled cigarettes then jumped to 20.3 percent by the end of the last quarter of 2014. More than 22 billion units of smuggled cigarettes are claimed to be in the market, half of which come from Bulgaria.

It is calculated that smuggled cigarettes have cost the Turkish economy 18 billion liras over the last five years.