The government is discussing reforms for the tobacco industry, and the Ministry of Finance and the Ministry of Economy should submit specific proposals by March 3, Kommersant writes, citing sources.
There are two options on the Cabinet's table for "whitewashing" the Russian tobacco market: licensing sellers or introducing a special register of permits. The main task is clear — to remove unscrupulous sellers from the market who have ever been caught trading in counterfeit goods. But it's not easy to achieve this. It is proposed to follow approximately the same path that was used in the alcohol market. For example, tobacco sellers want to be required to register in the State Information System for monitoring the turnover of goods (also known as GIS MT). Previously, major players signed up there.
Philip Morris International could not comment on the situation. That's what Sergey Glushkov, Director of Corporate Relations and Communications at JTI Russia, told Business FM.:
Sergey Glushkov, Director of Corporate Relations and Communications at JTI Russia: "Now the key to success in the fight against the illegal market lies in improving law enforcement, increasing the effectiveness of control and supervisory measures, as well as strengthening accountability measures for unscrupulous participants. According to the company's estimates, unscrupulous participants deprive the budget of more than 100 billion rubles annually."
There are a few more requirements. Tobacco sellers should not have tax debts, and they should own or lease warehouses and retail facilities with contracts for a period of at least a year. Tobacco sellers will also have to pay a duty: in retail — 10 thousand rubles, in wholesale — 500 thousand.
According to the government, previous measures to combat counterfeit tobacco, such as mandatory labeling, did not have a significant impact on the market. And the rise in cigarette prices has successfully offset the increase in fines. The new proposed measures, however, are more likely to lead to the departure of legal players and will not affect counterfeit sellers in any way, said Maxim Korolev, editor-in-chief of the Russian Tobacco industry news agency.:
Maxim Korolev, editor-in-chief of the Russian Tobacco industry news agency: "This is the final recognition of the failure of tobacco labeling. The labeling, introduced in 2019, has had virtually zero effect, if not a negative one. Therefore, there is nothing else to do but to add everyone to the list, to the registry with a license, and so on. Plus, we still have money to collect in the budget as fees. After all, this work and all measures will be aimed at the "white" part of retail — all those who already work legally. And those who work illegally didn't give a damn about registries and all that. Therefore, what effect will these additional costs have on retail? A significant part of legal retail will go into the shadows or stop selling tobacco altogether, and illegal channels will expand."
The government believes that the proposed measures, on the contrary, will become a problem for illegal trade, while legal trade will not be affected. But why such conclusions were drawn is not entirely clear, says Anton Voronov, a member of the federal presidium of the Small Format Trade Association and an expert in the tobacco industry.:
Anton Voronov, member of the federal presidium of the Small Format Trade Association, an expert in the tobacco industry: "Labeling — the one that concerns not traditional cigarettes, but electronic nicotine delivery devices — really failed to whitewash the market, because the initial values of the gray market were monstrous: 70% or even 90%. As is usually the case, the market is divided into two large zones: These are ordinary sellers who sell only legal cigarettes, and those who have never intended to comply with any laws, who sell Belarusian cigarettes at a price significantly lower than the minimum without online sales registers and labeling. It is clear that they will not be affected by retail licensing, the traditional problems of tobacco retail have not gone away: minimal margins and at the same time increasing regulatory burdens. We are also killing small producers. It won't lead to anything good."
Rosalokoltabakcontrol or the regions may gain control over the tobacco trade, similar to the alcohol market, but separation of powers is also possible.
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