Kiosk owners are demanding the Republic of Cyprus be exempted from a proposed EU directive that would increase taxation on tobacco products, warning it will fuel smuggling from the occupied areas.
During their appearance on Tuesday before Parliament’s Commerce Committee, kiosk operators warned that when tobacco prices rise, smuggling from the occupied areas will flourish and their turnover will be affected, resulting in lost revenues.
The Association of Continuous Service Stores (SYKADE) submitted letters to both the Finance Ministry and Parliament, requesting their intervention to exempt the Republic from the directive.
Commerce Committee members are expected to send a letter to the Finance Ministry in the coming days, requesting information on actions the government has taken regarding the EU directive. Representatives of the executive will be called to the committee shortly.
Smuggling accounts for major market share
SYKADE president Andreas Theodoulou told the committee that tax increases on tobacco products will distort the market and increase smuggling from the occupied areas. He stated that 12.8% of cigarettes and 52.6% of tobacco in the free areas originate from the occupied territories.
SYKADE cited studies showing a €50 million decrease in state revenues due to increased cigarette smuggling. Cigarette smuggling from the occupied areas will have a field day, he said.
He also pointed out that whilst a pack of cigarettes currently sells for €4.70, under the EU directive it will rise to €7 per pack.
Spyros Xynaris, president of the New Kiosk Owners Association, said licences for tobacco products are granted arbitrarily, creating a chaotic situation. He noted that throughout Europe, tobacco products are sold either through kiosks or specialised tobacco shops, whilst in Cyprus sales occur uncontrolled and without considering actual market needs.
A representative of the Cyprus Employers and Industrialists Federation (OEB) stated that kiosks contribute 20% to the economy’s GDP. He called on customs to toughen penalties for cigarette smuggling from the occupied areas.
Solar panels and card charges
Beyond the tobacco tax issue, affected businesses are requesting Parliament’s intervention to give them easier access to solar panels, as their applications remain stuck, they said.
They are also calling on the Central Bank to change the charges imposed on them for payments they accept via credit cards. According to figures presented, due to what was described as disarray in the retail market, from 1,450 kiosks operating in 2016, only 850 operate today.
The biggest problem, they said, is legislation on store categorisation and operating hours.
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