Why was the illegal tunnel in Carbide mostly used to smuggle illegal cigarettes?

Question

Possibly related: What is "Galacian tobacco" and what is its significance?

Carbide by Andriy Lyubka starts with the following news item:

BRATISLAVA (Reuters) - A smuggling title the length of seven soccer pitches complete with its own train has been found running beneath the border between Slovakia and Ukaraine along with more than 2.5 million contraband cigarettes, the Slovak government said on Thursday. Police said the tunnel had possibly also been used to smuggle people into...

July 19, 2012

Why "2.5 million contraband cigarettes"? I'm aware from the linked question that there was, in fact, extensive tobacco smuggling in Europe, including between Ukraine and its neighbors (the other book referred specifically to smuggling cigarettes into Ukraine from Poland). There was apparently even a Spanish drug cartel that specialized in tobacco smuggling (and more recently cocaine), who may have been behind the tobacco smuggling referred to in the other book. However, it still seems slightly odd to me that both Sweet Darusya and Carbide would feature tobacco smuggling so prominently and say nothing about other drugs. Is tobacco smuggling just a "bigger deal" in Ukraine than it is in the U.S.?

The one thing I did find is a WHO paper that claimed, among other things, that Ukraine has an unusually high prevalence of smokers. However, it also claims that 97% of the cigarette market is controlled by transnational corporations, who produce most of their cigarettes locally (and presumably legally) using mostly imported tobacco leaves. It also states that the real price of legal cigarettes has fallen substantially over time.

Can someone explain this quote to me? Why would the main good they were smuggling through the tunnel be illegal cigarettes?

Answer 1

Historically, cigarettes have often been a commonly smuggled item, admittedly something I'm largely familiar with because I kept running into references to similar smuggling operations in the United States in books I read. The aspect is taxation. Because tobacco is legal, but is considered a luxury and a vice, it's often highly taxed. As noted in the article you quoted, the current tax rate is almost a third of the price. While that is very low compared to other countries, it's still a decent chunk, and being able to sell a product for 2/3 the price of the legal version is potentially significant, particularly in the volume that you note.

I've also seen references to current tobacco tax rates being "historically low", but I can't tell if the intent is to say that it used to be higher (which might have made smuggling even more profitable at the time that the book is set), or that it's simply that much lower than neighboring countries.

Lastly, lacking further context from the book, it's also possible that the cigarettes were being smuggled into Slovakia, which boasts a much higher (82%) tax rate on cigarettes currently. Cheap cigarettes in Ukraine could be sold that much more dearly in Slovakia.

Answer 2

So, after reading further in the book, the cigarettes weren't being smuggled from Hungary to Ukraine, they were being smuggled from Ukraine to Hungary following the latter's entry into the European Union, where tobacco excise taxes were "nearly ten times higher" than they were in Ukraine (according to the book at least).

Tys's friend Icarus switched from smuggling gasoline to mostly smuggling cigarettes after gasoline fell from being three times as expensive in Hungary to being only marginally more expensive.