105 The illegal tobacco market is costing the state tens of billions. Experts are calling for more drastic measures.

The illegal trade in tobacco and nicotine products is an increasingly serious problem not only for the state budget, but also for security, consumer protection and the fight against organized crime. This was agreed by the participants of the second round table of the project aimed at comprehensively addressing this issue, organized by the Think Tank Rational Addiction Policies in cooperation with CEVRO University.

"The illegal trade in tobacco products can no longer be seen solely as a matter of tax evasion. In the European context, it is increasingly confirmed that organized criminal groups involved in cocaine trafficking and other illegal activities are also expanding their operations into the production and distribution of tobacco products. The issue thus goes beyond the economic level and has significant security impacts for individual European states and the European Union as a whole. OLAF and Europol have long been warning that the illegal trade in tobacco is part of broader criminal structures and in some cases even serves as a tool for financing or settling transactions related to the cocaine trade," said Jindřich Vobořil, Chairman of the Board of the Rational Addiction Policy Think Tank, adding: "Resolving this issue requires more consistent control of the movement of tobacco within the European Union from cultivation to the final product, the introduction of licensed sales, strengthening measures aimed at preventing and detecting corruption in this area within the state administration, and a fundamental tightening of sanctions for illegal actions at the level of criminal law and much higher financial sanctions. The current sanctions do not at all correspond to the economic attractiveness of such illegal activity and are absurdly low and therefore ineffective. I consider it irresponsible to ignore these connections or postpone the necessary measures!"

According to experts, the nature of the problem has changed significantly in recent years. While smuggling of products from countries outside the European Union used to prevail, an increasing part of illegal production is now being produced directly within the member states. In addition, organized groups use modern distribution channels, including social networks, communication applications and anonymous online marketplaces.

“The security dimension of this problem is often underestimated. It is not just about tax evasion, but part of broader criminal structures that are connected to drug trafficking, arms trafficking, money laundering and human trafficking. The state should perceive this area as an issue of internal security, not just a fiscal problem,” said security analyst Václav Malík.

Tomáš Petříček, CEO of Eunoia Horizons, also drew attention to the security context. According to him, organized criminal groups are increasingly becoming an instrument of geopolitical influence. “Modern organized crime no longer operates according to the model of traditional mafias. They are flexible, internationally interconnected networks that exploit the weaknesses of individual states and differences in legislation. In some cases, they also serve as a tool to promote the geopolitical interests of authoritarian regimes. The European Union should pay the same attention to these groups as to other hybrid threats,” said Petříček.

A significant part of the discussion was also opened by the economic side of the problem. BH Securities Chief Economist Štěpán Křeček pointed out that too rapid an increase in excise taxes could lead to a shift of consumption abroad or outside the legal market. “The Czech Republic today has the most expensive cigarettes of all neighboring countries. As a result, part of the consumption goes abroad or into the gray economy,” said Křeček, adding: “Based on our calculations, the state may lose approximately 35 billion crowns in excise duty and VAT in 2025 alone. The solution is a predictable and stable increase in rates that will not create significant price differences compared to neighboring countries.”

The roundtable participants also discussed the possibilities of more effective law enforcement. Among the proposed measures were more consistent use of the European system for the traceability of tobacco products, better sharing of information between state institutions, greater control of digital sales channels, and stricter penalties for selling products to minors. The discussion also addressed the need to create a more uniform approach to regulating new nicotine products, strengthening control of supply chains, and streamlining cooperation between security forces, regulators, and the professional community.

The second roundtable followed up on the April meeting, during which the current situation on the market was mapped. The aim of the follow-up meetings is to prepare a set of recommendations that can contribute to limiting the illegal market, protecting consumers, more efficient tax collection and strengthening security in the Czech Republic and in the European context.