The amendment of the fiscal legislation places "Taban Trafic" at a disadvantage

• Interview with Szabo Gyongyike, the manager of "Taban Trafic"

Reporter: What is your view on the current state of the tobacco market?

Szabo Gyongyike: Like any economic activity, the market for tobacco products is full of obstacles. The market that we operate on is quite difficult, because an important quota of that segment is represented by contraband, which influences the development of certain ranges of products. The economic and financial crisis in Europe is affecting the Romanian market as well, as the cigarette distributors are rather wary of promoting new ranges of products. The legislation isn't exactly helping us either, since it is extremely convoluted, prone to interpretation and frequently modified.

Reporter: In spite of all this, the company you represent still exists and keeps going. How are you dealing with the crisis?

Szabo Gyongyike: In order to overcome the economic crisis, we have revised the expenses a bit, cutting them wherever possible, but we have placed the emphasis on sales, as we have launched new marketing strategies, in order to boost our market segment. Two important elements which very heavily affect our position on the market and the volume of our sales are the quality and the price of our products. They have always been our company's main focus and we have therefore succeeded in keeping our position on the distribution market, with a low markup. The management of the company is looking for solutions to cut costs and expand the market for its products.

Reporter: What types of cigarettes do you sell?

Szabo Gyongyike: Our company imports and sells mid-level cigarettes, both in terms of their quality, as well as of their price.

Reporter: What is the biggest obstacle which the company is facing in conducting its operations?

Szabo Gyongyike: The high level of the excise is for us the greatest obstacle, because, it is making the price of cigarettes too high compared to the Romanians' income. Also, as I have already mentioned, contraband remains, and since our company is located near the border, it is far more affected by this phenomenon. That is why, in order for the activity of cigarette distributors to improve, we need the state's institutions to fight smuggling. We also have another problem. The amendment of the fiscal legislation which will come into effect starting with April 1st, 2012, which changes the delay for the payment of the excise, will place our company, which is a "registered consignee", at a disadvantage compared to the "authorized warehouse keepers". According to these legislative modifications, "the registered consignee" will be required to pay the excise within 24 hours after having received the products, whereas the "authorized warehouse holders" will still have until the 25th of next month from the moment of the delivery of the products to pay the excise.

Reporter: How are you dealing with competition?

Szabo Gyongyike: Since the market share of the company is low, for us competition means a continuous struggle. Many times we can't keep up with the multinational producers, who in fact dictate the market conditions. Given the increasing competition on the market for tobacco products, the company will continue to preoccupy itself with finding solutions to cut costs and to expand the market for its own products.

Reporter: What do you think should be done to fight all of these obstacles?

Szabo Gyongyike: In order to fight these problems a clear, certain, real, transparent and unified legislation should be implemented for all of the participants on the tobacco market. As for smuggling and tax evasion, they can only be diminished through strict oversight and control from the state. Smuggling does not only affect our activity as legal participants in the market, but the revenues of the state budget as well, which is trying to make up its losses through other means, but is still us (who legally participate in the market) who will be affected, ending up being choked to death by the very high levels of the various taxes. Because of them, we are forced to curb spending, which affects our marketing policies.

Reporter: Thank you!