british american tobacco p.l.c. sustainability report 2010 - Romania’s approach to tackling illicit trade

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Sustainability Report 2010

Romania's approach to tackling illicit tradeIn January 2010, a study showed illicit cigarettes in Romania reached a peak market share of 36.2 per cent, more than double the estimated share of 15.8 per cent in mid-2008. This meant that illegal cigarettes accounted for more of the market than cigarettes from any one of the legitimate tobacco manufacturers. British American Tobacco Romania and other local tobacco companies believe this was largely the result of a tax hike which significantly increased the price of legitimate cigarettes.

British American Tobacco Romania worked to raise awareness and encourage the authorities to address the issue. Their actions included:

  • Meeting with multilateral organisations to discuss the losses to Romania’s state budget caused by illicit trade.
  • Taking part in a live television debate with authorities and other tobacco manufacturers on the issue of illicit trade. The key message to emerge was that the Romanian government stood to lose €1 billion in unpaid taxes in 2010 if illicit trade remained at the same level.
  • Launching a nationwide media campaign endorsed by the Ministry of Interior. Through billboards, newspapers, the internet and television, Romanians were shown what could be achieved for the country if the state regained the €1 billion in unpaid taxes, such as new housing, jobs or roads.

National and international authorities responded positively and the Romanian Government made it a priority to end illicit trade, with new legislative measures and increased security around borders being introduced without delay.

In July 2010, a new study revealed that there had been a remarkable drop in illicit trade down to 21.3 per cent of the total tobacco market from the January peak of 36.2 per cent.