Kiosk owners in Cyprus warned on Monday that proposed increases in tobacco taxation risk pushing consumers into illegal channels, weakening legal retail trade and reducing state revenues rather than increasing them.

Speaking to Sigma, kiosks’ association (Sykade) President Andreas Theodoulou said while taxation remains a legitimate public health tool, its impact in Cyprus must be assessed within the island’s specific market conditions.

“Cyprus presents a peculiarity not found in other EU states,” Theodoulou said, referring to the Green Line and the ease of access to untaxed products from the north.

He added that “large tax increases affect not only demand but also the place of purchase of products.”

He said price differences between legal and illegal markets already influence consumer behaviour, and further increases could intensify this shift.

“The market shows that tobacco products are extremely sensitive to price changes,” he said.

According to estimates provided by the association, approximately 13 per cent of cigarette consumption and 53 per cent of rolling tobacco consumption already comes from the north.

Theodoulou warned that further tax rises could expand this proportion.

“This development is not simply a commercial phenomenon but a matter of fiscal loss and market control,” he said.

The warning comes amid ongoing EU discussions on revising excise duties for tobacco and nicotine products, including e-cigarettes and heated tobacco products.

Industry representatives argue that such measures could significantly increase retail prices in Cyprus.

Sykade estimates that a pack of cigarettes, currently priced at around €4.50 to €5, could rise to between €8 and €8.50 under proposed adjustments.

“If implemented without adjustments, we estimate that within a year there will be an increasing market shift towards uncontrolled channels,” Theodoulou said.

He also highlighted the importance of tobacco products for the retail sector, stressing that “tobacco products are a key asset for convenience stores,” warning that “a significant reduction in legal sales would have a multiplier effect, including increased risk for small family businesses”.

Sykade further argued that rising illicit trade would not only affect retailers but also state finances.

The association estimated that illegal tobacco already results in losses exceeding €50 million annually.

The association has called for Cyprus to seek flexibility within the EU framework, citing the island’s division and enforcement challenges.

Among its proposals are recognition of the Green Line as a factor in policy design, stronger customs enforcement, harsher penalties for smuggling, and a phased transition period of up to ten years for new tax rates.