Greed makes the Romanian state turn left. The reason why more and more counterfeit cigarettes are smoked in Romania
A well -known teacher in the UK has analyzed the negative consequences of excessive taxation of tobacco products in Europe and Romania. His conclusion is that not only the huge excise duties do not bring the money expected to the budget, but people get to smoke counterfeit cigarettes.
Romania is one of the countries where a lot is smoked. Photo: Adevărul archive
Christopher Snowdon, director of the Life Style Department of Institute of Economic Affairs (IEA, Great Britain), has announced the negative consequences of excessive tobacco products in Europe. The results of the report have been published by the Epicenter and demonstrate, with solid empirical data, that the high excise dates not only become an increasingly insecure source of budgetary revenues, but also feed illicit trade, putting pressure on public security and favoring organized crime networks.
“The too high excise duties have smuggling, not to quit smoking. The study shows that between the price of tobacco products (strongly influenced by taxes) and the consumption of counterfeit or smuggling cigarettes there is a direct and statistically significant correlation in most European countries. Although the stated purpose of these excise duties is to reduce the smoking, the reality of the Western Europe, is accompanied by a proportional decrease in the number of smokers – which means that an increasing part of consumption is satisfied by the black market”, Says the author.
Romania: a fragile balance in the face of excise duty
Romania is presented in the report as a particular case. So far, the country has managed to reduce the consumption of illicit tobacco considerably: from 12% in 2019 to 6% in 2024 (KPMG, 2024). This evolution was largely due to a moderate fiscal regime compared to other European states. In 2024, the excise duty on a pack of cigarettes in Romania was below 3 euros, compared to the EU average of 3.90 euros and over 7 euros in France or the United Kingdom. But this balance is about to be broken.
Within the new fiscal measures announced by the Government of Romania in July 2025, tobacco excise duties will be increased by 10%, as part of a package of adjustments that includes VAT from 19%to 21%. In addition, Romania follows the trend imposed by the European Commission and could apply a review of the minimum excise level, which will significantly increase the price of cigarettes from August 2025.
“Romania risks repeating the mistakes in Western Europe, where too high prices have led to the explosion of smuggling. Smokers do not disappear, they are just orienting to other sources, and these sources are illegal and dangerous”, Warns Dr. Snowdon.
In Romania, counterfeit cigarettes arrive in particular from Ukraine and the Republic of Moldova. Often, they are more dangerous to health, but not just that. As the phenomenon increases from day to day, stamped and taxed cigarettes end up not being sold because they have a very high price, and the population resorts to smuggling cigarettes. In this case, the budget of Romania begins to be widowed by significant amounts. Or in other words, the greed of the state that constantly increase the assets has an opposite effect.
What does the data show in the report
The data in the report show that an increase of 1 euro per pack is associated with an increase of 5–12 percentage points of the illicit market (Prieger & Kulick, 2018). Lower pricing countries, such as Romania, Bulgaria and Slovakia, currently have lower levels of illicit consumption, but a sudden increase in excise duties could quickly reverse this trend.
In the United Kingdom, between 2021 and 2024, the sales of excised cigarettes decreased by 44.4%, but the smokers rate reduced by only 0.5 percentage points, a clear signal that the black market exploded. In France, Greece and Ireland, the illicit products market has increased by up to 400% in the last decade.
Studies do not support the thesis that corruption would be the main determinant of the illicit market – on the contrary, the price and accessibility are the dominant factors.
A security risk not just a fiscal problem
The report warns that excessive taxation risks leading not only to budgetary losses, but also to escalate crime. In Australia, similar policies have generated a true “tobacco war”, with over 200 burned tobacco and more victims.
Europe has not yet reached that point, but the authorities must learn from these mistakes. “The poorly calibrated fiscal policies do not reduce smoking – but move sales from the legal area in the hands of criminals”concludes the author.
Who's Snowdon
Dr. Christopher Snowdon is director of the Life Style Department at Institute of Economic Affairs (IEA) in London. He is the author of several volumes on regulation, public policies and lifestyle and Nanny State Index publisher, which monitors policies to restrict consumption in Europe.
