Rabat - Cigarette smuggling in the Maghreb constitutes one of the major assets of a broader illicit trade landscape. A recent study by professional services company KPMG finds that one out of eight cigarettes consumed in Morocco in 2016 were illicitly traded.
Rabat – Cigarette smuggling in the Maghreb constitutes one of the major assets of a broader illicit trade landscape. A recent study by professional services company KPMG finds that one out of eight cigarettes consumed in Morocco in 2016 were illicitly traded.
While Morocco imports illicit cigarettes from its two bordering countries, increasing reinforcement of the Moroccan–Algerian border has created substantial demand for smuggled commodities. The largest flow still comes from Algeria, accounting for 65 percent of total illicit cigarettes coming into Morocco.
For example, a legal pack of Marlboro cigarettes is sold in Morocco for USD 3.38, while the same pack smuggled from Algeria goes for USD 1.91 and from Mauritania for USD 1.35. The same pack can also be illegally exported to France for USD 7.48.
The high rate of illicit cigarette consumption in Morocco is, according to the report, a consequence of several reasons, including the illegal but normalized practice of purchasing and re-selling single cigarettes. In 2016, 38 percent of cigarette consumption in Morocco came from single cigarette purchases in 2016.
The practice can make detecting illicit cigarettes by consumers difficult, particularly since consumers do not know the origin of the cigarettes purchased.
Though Morocco’s 1,559 kilometer border with Algeria has been officially closed since 1994, significant amounts of illicit products have long entered and exited the country across this and the country’s other external boundaries
If the rate of illicit tobacco inflows had been consumed legally, an additional tax revenue of approximately USD143 million would have been raised in Morocco.
To minimize the loss, Morocco has made efforts to reduce illicit trade, through increased law enforcement and enhanced border security, which have contributed to the decline in illicit cigarettes trade in Morocco.
The introduction of lower-priced brands in Morocco in 2015 also aided the decline of the illicit business,as the new brands are sold for a similar price to illicit cigarettes. This has allowed consumers of illicit tobacco to switch to the legal market, leading to an 8 percent increase in legal domestic consumption in 2016.
Combined, these policies have seen the price of illicit cigarettes drop by 39 percent from 2015 to 2016.
This however has led to a rise in the prices of regular cigarettes in the country, with the average price of a pack of most sold brands in Morocco increasing by 2.5 percent between 2014 and 2016.
The national tobacco company indicated on Wednesday during a press conference in Skhirat that taxes on cigarettes account for 60 percent of their price, adding that taxes on tobacco in Morocco are among the highest in the world.
Revenue from the consumption tax on alcoholic drinks, cigarettes, and gambling is expected to exceed MAD 10 billion in 2017.
According to the finance bill, tobacco, the most important generator of revenue, is expected to pump MAD 9.16 billion into Morocco’s treasury.