Tunisia annually loses 40% of tobacco revenues

Tunisia's annual losses due to cigarette smuggling rise to about 40% of the revenues of the tobacco sector, which provides the state budget with 1.3 billion dinars annually. The influx of smuggled cigarettes to Tunisia has declined by 35% in 2015 and 2016, driven by policies adopted by the government to combat parallel trade, smuggling and border truck monitoring.

The manufacture of tobacco and the cigarette trade represent the basic products of the direct taxes of the State Treasury, but the expansion of smugglers' activity in this area has lost Tunisia the ability to control this trade.

The tobacco factories have increased its production capacity by 40% since last year, and has a program to expand manufacturing capacity by focusing on a new production chain. Manufacturing capacity has increased from 17 million packs per month to 26 million packs per month. About 75% of the price of cigarettes is direct taxes go to the state treasury, and therefore the decline in the demand for local cigarettes means the lack of direct revenues of the treasury.

Economists consider that the loss of control over trade and cigarettes by the state is proof that existing laws are no longer able to protect the sector, which calls for a thorough review of these laws in order to further control the distribution routes. Despite the general war of customs on cigarette smugglers, the market situation suggests that nothing has changed. 

All the stalls and even street vendors provide smuggled cigarettes that are popular in the Tunisian market for their price hikes. The price factor is a key determinant of the extent to which Tunisians have access to anonymous cigarettes at times, even though consumers are aware that they are not subject to prior control and risks to health.

Despite the fact that the value of Tunisian imports is more than 42,000 million dinars annually, the portal of the Tunisian customs provides the state treasury with only 800 million dinars, which indicates the weakness of the Tunisian customs system and its inability to extract customs duties for imported goods because more than half of them cross through smuggling routes.