BULGARIA. A government backlash against an escalating black market economy has resulted in a decision to close the country’s lucrative duty free land border trade.
Local reports said that Bulgaria will lose roughly US$200 million a year in lost sales, following the Finance Ministry’s decision last week to close duty free shops at the country’s border check points. The Finance Minister’s edict, due to be implemented within 10 days, will mean the closure of 44 duty free shops, run by 16 companies, at Bulgaria’s terrestrial borders.
The revenues will be picked up instead by Bulgaria’s neighbours, local duty free association representatives said. And instead of fighting the shadow economy, the measure will only open a larger market for smuggled goods in Bulgaria, they said.
The government recently unveiled a campaign to crack down on black market activities that generate revenues estimated at €250 million (US$292 million) a year. Finance Minister Milen Velchev is creating a fiscal police unit and a national agency on revenues, stepping up customs controls and introducing measures against selling liquor and cigarettes with counterfeit excise duty stickers. Local reports said that one of the main sources of illegal goods on the domestic market is the country’s border shop trade. Duty free shops at the airports, sea and river ports and railway stations will be preserved.
The move to close duty free stores has been approved by the International Monetary Fund.
“The government has been struggling for two years to liquidate the black economy-friendly environment that has been created in the past ten years,” Velchev told local reporters. “The society must be united against the illegal trade to win this war.”
From early 2004, he said the government will introduce new excise duty stickers for alcohol and cigarettes that will offer better protection against forgery.
Last Friday seven people suspected of smuggling over US$1 million of cigarettes into Bulgaria were arrested. The detainees included customs officers, policemen and crew members of a Bulgarian cargo plane.
Bulgaria is set to join the European Union in 2007, when any intra-EU duty free operations would have to cease.
