THESSALONIKI – Unable to stop or slow contraband dealing in Greece, customs officials in Thessaloniki did manage to grab 10 million packets of contraband cigarettes from a container inspected in the port city, using a sniffer dog and new X-ray scanner.

They said the cargo was labeled as Christmas decorations when it was discovered, estimating it would have cost the government 1.9 million euros ($2.28 million) in lost tax revenues with the losses growing after new tax hikes last year imposed by the ruling Radical Left SYRIZA-led coalition, which promised to cut them.

In June, trade in contraband cigarettes on the Greek market had exploded and accounted for more than 33 percent of purchases, the newspaper Kathimerini said. They are sold openly on the streets of Athens and on the grounds of universities, where a SYRIZA-backed sanctuary law prevents police from entering.

In October, 2016, the Finance Ministry estimated the market share of contraband cigarettes at 22 percent, after amounting to 19.8 percent at end-2015 before SYRIZA took over and critics said lawlessness grew rapidly.

“The sector is in despair as almost four out of 10 cigarettes are illegal and the industry’s turnover has shrunk by more than 10 percent,” Constantinos Iakovou, head of the Association of Tobacconists and Kiosk Leaseholders of Macedonia said then.
An avalanche of tax hikes, including on cigarettes, has led to an upsurge in counterfeit and smuggled cigarettes costing the government 600 million euros ($680.6 million) in losses.

That was the finding from the audit firm of KPMG in a Project Sun report prepared for the Royal United Services Institute for Defence and Security Studies which said Greece had the second highest rate of counterfeit and contraband in the European Union.

Smuggled cigarettes are sold openly on the streets in some neighborhoods, often by refugees and migrants and with millions smuggled across the border, including from Bulgaria.

More than four billion unlawful cigarettes are sold in Greece annually, in a country with one of the highest rates of smoking in the world, with other sources being China, Egypt and Pakistan.

The study said counterfeiting and contraband had fallen 12 percent but is still costly.

Three-quarters of flows into Greece came from cigarettes with no country-specific labelling or counterfeit cigarettes, the Athens News Agency said in a report.

Greece also had high volumes of cigarettes with no country specific labelling where there was legal distribution in the country, including the brands Cooper, GR and Karelia. Outflows from Greece were mainly driven by tourists, who represented 87% of trips from Greece to EU countries in 2016.

Organized crime is said to be behind the vast majority of the smuggling but their role has been largely hidden and difficult to pinpoint.

On land, illicit cigarettes enter Greece via ‘ant smuggling’ across the borders with Albania, Turkey and Bulgaria. At sea, similar ‘little and often’ smuggling takes place with patrols unable to cover almost 14,000 kilometers (8700 miles) of coastline.

A 2015 report by the Joint Research Centre on Transnational Crime suggests that as much as 70–75% of illicit cigarettes arriving in Greece are intended for other countries while those staying in the country are supplied to street sellers, kiosks and small shops, and sold openly in city centers at a far higher profit and without paying taxes to the government.

Greece has among the highest seizure rates for illicit tobacco in Europe but budget cutbacks as party of austerity measures is making it difficult to combat the phenomenon.