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ECONOMICS > Huge tax revenue lost in cigarette smuggling

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Security forces in the central province of Kırıkkale seized smuggled cigarettes,
tea and filters in a raid. Smuggling has put a huge dent in Turkish tax revenue. DHA photo

Security forces in the central province of Kırıkkale seized smuggled cigarettes, tea and filters in a raid. Smuggling has put a huge dent in Turkish tax revenue. DHA photo

One in five cigarette packages in Turkey is smuggled, the head of the Confederation of Turkish Craftsmen and Tradesmen (TESK) has said, noting that Turkey consequently loses between 4 billion and 5 billion Turkish Liras in tax revenue every year.

“The grocery trades have been badly hurt due to smuggled and fake cigarettes and tobacco in recent years. While one out of every five package of cigarettes is smuggled in Turkey [in general], one of two is smuggled in the southeast of the country,” said Bendevi Palandöken, adding that a tax hike on cigarettes would only increase the amount of smuggling around the country.

The price on many packs of cigarettes increased by a lira after a tax hike on the first day of the year.
Palandöken said vendors paid 5.70 liras tax for a product worth 7 liras in the market, while smugglers were not subject to any tax.

Recouping the 5 billion liras in tax would give the Turkish state enough funds to construct a new Bosphorus Bridge every year, Palandöken said.

The TESK head, however, praised the government’s fight against smuggling, noting that the markets had just begun to recover due to new regulations. Despite this, the rate of smuggling is still considerably high, he added.

Police have seized a large number of smuggled cigarettes in recent days, including 225,000 packages in a single operation in nine provinces mainly in southern Turkey, Anatolia news agency reported yesterday. Some 37 people were also detained in the operation.

Another 10,000 were seized in the northwestern province of Kırklareli a day earlier, Doğan news agency reported, while 80,000 packages were seized in the Central Anatolian province of Çankırı on Jan. 5.

Engine lubricant falls in market


At the same time, a new tax policy on “10 numara,” an engine lubricant which is also used as a fuel, has resulted in massive tax losses and environment devastation, according to officials.

A tax hike on mineral oil has decreased sales of 10 numara, according to Petroleum Industry Association (PETDER) General Secretary Erol Metin.

“Before tax increase, the price of 10 numara was three liras per liter and vendors were gaining all three liras. But now, the vendors have to pay half of the price in tax,” he said.

PETDER President Ahmet Erdem said the problem could be solved by removing the stock of 10 numara from the market.

January/08/2013

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Brit in Turkey

1/8/2013 10:30:15 AM

If the government were to lower the taxes tax revenue might then increase. It's the same warped logic over the purchase tax on cars that cannot see why sales of new cars is falling.
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