Legal tobacco selling is declining in favor of the street sale. The gray market “resurrected” ever since the prices of tobacco products increased dramatically. This is an emergency situation and even the Government is well aware of it. Something must be done, and as soon as possible.
Vasilije Kostić, economic analyst, says that when the excises on tobacco are reduced, it can indicate many things at the same time.
“The first thing, in my opinion, is that budget revenues are not generated at planned dynamics or in planned amounts, which can have negative effects and require fast reaction. It can also mean that the gray zone has been much more effective and recorded increase on the account of the formal zone of the market, since it is almost impossible to predict that the consumers cut down on smoking so suddenly”, says Kostić for CdM.
He says that there’s another implication, maybe even the most important one – that the institutions competent for suppressing gray zone haven’t been efficient enough to guarantee the unhindered functioning of the legal sphere.
“This fact indicates that every increase in the price of tobacco will cause an increase in the gray market, which can be a serious problem in the generation of budgetary revenues”, said Kostić.
The economist Vesko Pejak also agrees that increase in the tobacco prices was wrong.
“Every increase in prices flows into the black market. We have reasons to believe that somebody „whispered“ to the Minister to increase tobacco prices in order to give smugglers a chance”, he says.
The consequences will be mostly felt when people start lacking medicines. Smugglers have already developed the strategy and their tobacco will always be cheaper. Therefore, it’s obvious that the majority of the people in the ministry has no clue about the reality.
According to Amar Borančić, President of the “Young Liberals of Montenegro”, the most productive solution lies in the principle of the higher degree of deregulation and the application of the liberalization principle.
