A new report from the European Policy Information Center (EPICENTER), casts a spotlight on the Greece’s deepening struggle with illegal tobacco. According to the findings, Greece ranks fourth among European countries in the share of illicit and counterfeit tobacco products, with an estimated 25% of all tobacco consumed coming from the black market.
The research highlights a broader European trend: as governments raise tobacco taxes in an effort to curb smoking and boost public revenues, they may be inadvertently expanding the illegal market instead.
High taxes, low returns
The EPICENTER study warns that every 1 euro increase in the retail price of tobacco due to higher taxes can drive up the black market share by 5–12%. While the policy goal may be public health or revenue generation, the unintended consequence is a surge in illegal sales—and in many cases, little to no fiscal benefit. Instead, the proceeds often end up in the hands of criminal organizations.
A complex picture in Greece
While price and affordability play a role, the study finds that Greece’s high rate of illicit trade cannot be explained by taxation alone. Other contributing factors include:
• A weak tax compliance culture
• Institutional shortcomings and gaps in enforcement
• Porous borders, which make smuggling easier
• Proximity to countries with lower tobacco prices, making Greece a gateway for illegal imports
Geography and perception don’t tell the whole story
Interestingly, geographical proximity to known sources of illegal tobacco—such as Russia, Ukraine, or Belarus—is no longer a major factor, the study says. These countries, once primary sources of contraband cigarettes, are no longer as central to Europe’s illicit trade routes.
In addition, the report finds no strong correlation between perceived corruption and the size of a country’s black market. In some countries with low levels of perceived corruption, illegal tobacco use is high; in others with higher corruption scores, it remains relatively contained.
A warning to policymakers
Lead author Dr. Christopher Snowdon, also the curator of the Nanny State Index, underscores a key takeaway: “It’s delusional to believe that taxation doesn’t significantly impact the illegal tobacco trade,” he says. “When legal prices rise too high, demand shifts underground.”
