Lawmakers across the developed world seem to be united behind the idea that the best long-term approach to reducing levels of smoking is to keep on hiking the price of tobacco products until consumers can no longer afford them. Earlier this week, CBC News reported that an internal Health Canada study recommended that Ottawa should significantly increase the price of cigarettes if it wants to meet its target of reducing smoking levels to 5% of the Canadian population. In the UK, British Chancellor Philip Hammond yesterday used his Budget speech to announce that the price of a packet of cigarettes in Britain will continue to rise at 2% over the rate of inflation. The Australian government intends to take the price rise strategy to extreme lengths by increasing the cost of a packet of cigarettes to A$40 ($30.33) by 2020. But while numerous studies have shown that making tobacco products more expensive does reduce levels of smoking, there is evidence to suggest that increasing the cost beyond a certain point may have more negative effects than positive.
A report published at the beginning of November by the Washington DC-based Tax Foundation think tank revealed that New York, which levies the highest rate of state cigarette taxation in the US, is the country’s capital of illicit tobacco. The Tax Foundation estimates that in 2015, the latest year for which data is available, 56.8% of all cigarettes smoked in New York were smuggled into the state. New York City Mayor Bill de Blasio announced he would like to see tobacco taxation rise still further in the state, suggesting that cigarette tax should increase by $2.50, bringing the minimum price for a packet of smokes up to $13. This would make cigarettes purchased in New York three times more expensive than those bought in North Dakota, making interstate tobacco smuggling even more attractive to organised criminals. In Europe, 9% of all cigarettes smoked were fake or smuggled last year, representing an overall tax loss to European governments of as much as €10.2 billion ($12.16 billion), according to a study from KPMG. The report noted that this made illicit tobacco one of the largest major players in the European cigarette market last year. In May, a separate KPMG report revealed that the Australian government lost A$1.61 billion last year as a result of tobacco smuggling, and that 13.9% of tobacco products consumed in the country were illicit
Put simply, repeatedly raising the price of tobacco products both increases the profits organised criminals can make from the illicit cigarette trade, and makes it more likely that those who are determined to continue to smoke will seek out cheaper ways of doing so, be they legal or not. The fact that cigarette prices in many western countries are going up at such a fast pace makes it inevitable that the illicit tobacco trade will continue to grow, losing governments billions of dollars’ worth of lost tax revenues, and lining the pockets of organised criminal gangs and terror groups. In countries such as the UK and Australia, and in certain US states, the point at which the positive effects of repeatedly hiking the cost of tobacco products continue to outweigh the negative seems to have passed. While the World Health Organisation has said that increasing the price of tobacco is one of the cheapest and most effective ways of reducing smoking, the wisdom of piling taxation onto cigarettes sold in the developed world is looking increasingly shaky as prices continue to go up and up. If anything, prices need to go up in low to middle-income countries, which are home to 80% of the world’s smokers.
As tobacco prices continue to rise in developed countries, more organised criminals will be drawn to the illicit cigarette trade, which is becoming all the more attractive to smugglers as potential profits soar; not least due to the fact that illicit tobacco is much less risky than drug dealing or people trafficking. The fact that profits from cigarette smuggling are known to fund terrorist groups such as Daesh, Hezbollah and al-Qa’ida makes the policy of continually fuelling the trade by whacking up prices in the developed world look increasingly questionable. As well as creating business opportunities for criminals and terrorists, high cigarette prices are also resulting in the loss of huge amounts of tax that could be spent on public health initiatives and research into smoking-related illnesses.
Increasing tobacco prices has played a major part in cutting smoking rates in many countries across the world, but the time has come to recognise that continually hitting tobacco enthusiasts in the pocket will not eradicate the habit. Putting the libertarian argument that people should be allowed to smoke themselves into an early grave if they so wish to one side, the time has come for policy makers to accept that putting up the price of tobacco again and again has serious consequences that have for some time now outweighed the benefits of doing so. In developed countries at least, governments that want to reduce smoking rates must come up with new ways to persuade smokers to stub out the habit for good.
Police arrest man in connection with plot to smuggle 16 tonnes of loose-leaf tobacco and 20 million cigarettes into Australia
An anti-tobacco smuggling police unit in Australia has detained a man in connection with a plot to illegally import tobacco products that cost the country some A$24 million ($16.6 million) in lost taxes.
Officers from Australia’s Illicit Tobacco Taskforce (ITTF), which was set up back in May 2018 to help the country’s government raise A$3.6 billion over a four-year period by cracking down on tobacco smuggling, arrested the suspect on Saturday morning in connection with the massive haul.
The man was detained at Melbourne Airport before he was later charged with five offences against the Customs Act 1901.
He appeared before Melbourne Magistrates Court on Monday morning, where he was bailed to reappear in April next year.
Prosecutors claim the man was involved in a plot to smuggle almost 16 tonnes of loose-leaf tobacco and over 20 million cigarettes into Australia over the course of the past two years, avoiding an estimated A$24 million in excise duty.
Commenting on the seizure, Acting Commander of Australian Border Force (ABF) ’s Special Investigations unit Leo Lahey said: “This arrest is the result of a complex and protracted investigation by the ITTF and continues the focus of the ITTF on targeting the most serious and significant organised crime syndicates trafficking in illicit tobacco.”
In Australia, the maximum penalty for tobacco smuggling is 10 years behind bars and/or a fine of up to five times the value of duty evaded.
Earlier this month, ABF revealed that its officers had detected and seized more than 39 million illicit cigarettes in Melbourne over the course of just one week.
The illicit cigarettes, which would have deprived the Australian government of some A$40 million in evaded duty had they been sold on the black market, were discovered in sea cargo shipments after customs officers noted inconsistencies with import declarations.
Border force officers said one shipment, which was declared as being synthetic grass but in fact contained 20 million cigarettes, was not hidden at all, while a second that was declared as glass bottles was stashed behind a cover load and contained 19 million cigarettes.
Speaking after the discovery of these shipments, Assistant Minister for Customs, Community Safety and Multicultural Affairs Jason Wood said that since its establishment, the ITTF had been involved in the seizure of more than 67 tonnes of smuggled tobacco and approximately 230 million trafficked cigarettes, protecting more than A$264 million in duty.
UK-based tobacco smuggling gang jailed for ten years after being caught with over 10 million illicit cigarettes
Three men have been jailed for a total of more than 10 years after UK tax authorities found more than 10 million smuggled cigarettes stashed on a farm in the English county of Yorkshire.
Michael Haley and his two Polish associates, Rafal Miller and Grzegorz Kojak, were caught red-handed by investigators while they were loading illicit tobacco onto the back of a truck.
After opening several metal containers the trio were loading onto a lorry, revenue inspectors discovered multiple cardboard boxes filled with a total of 10,853,500 cigarettes.
If the illicit cigarettes had been sold on the black market, the UK Treasury would have been deprived of over £3 million ($3.93 million) in unpaid tax duty.
All three men pleaded guilty to excise fraud during a hearing at Hull Crown Court, resulting in Haley and Miller each being jailed for three years and nine months, and Kojak being handed a sentence of three years and three months.
Police are still investigating the whereabouts of a fourth mad who fled the scene as Haley, Miller and Kojak were arrested.
Commenting after sentencing, Brett Wilkinson, Assistant Director of the Fraud Investigation Service at Her Majesty’s Revenue and Customs, said: “This was a deliberate attempt to flood the streets with illegal cigarettes and deprive our public services of millions of pounds.
“Hayley, Kojak and Miller thought their smuggling scam would go unnoticed – but they were wrong and now they are paying the price.
“We will continue to pursue criminals who think stealing from taxpayers is acceptable. I urge anyone who has information about the smuggling, selling or storing of illicit tobacco to report it.”
Last week, North Yorkshire County Council Trading Standards announced that its officers had used sniffer dogs to detect illicit tobacco worth an estimated £27,000.
The dogs were deployed during an intelligence-led operation targeting tobacco smugglers.
The canines located 29,000 cigarettes and 29.25kgs of rolling tobacco concealed hidden in kitchen shelving units and drawers that would not have otherwise been discovered during raids on properties linked to the alleged smugglers.
Dr Lincoln Sargeant, Director of Public Health for North Yorkshire, commented: “People who deal in illegal tobacco are more likely to encourage others, especially children and young adults, to smoke.
“All tobacco is harmful but the illegal tobacco market and in particular the availability of cheap cigarettes makes it harder for smokers to quit and remain smoke-free.”
Europe-wide operation results in dismantling of tobacco smuggling operation that cost tax authorities €70 million
An international operation coordinated by Eurojust, Europol and the European anti-fraud office OLAF has resulted in the breakup of a cross-border organised crime gang behind a major illicit tobacco smuggling operation.
A day of action involving law enforcement officials from seven countries resulted in the arrest of 18 people suspected of having links to the conspiracy.
The suspects were arrested on suspicion illegally storing and trading some 670 tonnes of illicit tobacco and several money laundering offences.
Alleged members of the gang, who are said to have deprived customs authorities in the Netherlands of some €70 million ($77.7 million) throughout the course of their plot, were detained in a coordinated series of 29 raids in Italy, Poland, Belgium, the UK and the Netherlands, mainly in the south eastern province of Limburg.
Police officers from Romania and Cyprus are also said to have contributed to the operation.
In total, the effort involved more than 250 investigators, including police, fiscal detectives and customs officers who were deployed during the action day.
In a statement, Europol said the gang is thought to have purchased tobacco in Italy before processing it at illicit cigarette factories and selling it on to traders.
“The criminals played a role as well in the brokerage of illegally produced cigarettes and bought, sold and repaired machinery for cigarette production,” Europol said.
“As a result of international cooperation, since last year already illegal cigarette factories have been dismantled in Poland, the Czech Republic and the Netherlands, whose operators had close links to the criminals who have now been arrested.”
The operation was the result of analysis conducted by a special operational taskforce that was set up in February 2018 comprising of Europol, UK tax authorities and FIOD, the Dutch fiscal information and investigation service.
In a report published back in June of this year, KPMG said the illicit trade in black market cigarettes across the European Union deprived member states of some €10 billion of tax revenues in 2018.
This was up from €369 million in 2017, despite the total number of counterfeit and smuggled cigarettes consumed in EU nations falling 1.1 billion to 43.6 billion.
According to the study, which was commissioned by Philip Morris International, the EU market for illicit smoking products was equal to legal cigarette sales in the UK, Austria and Denmark combined in 2018.
- Over 200 held in Interpol-backed operation targeting Balkan human trafficking networks
- US big cat dealer jailed for 22 years for plotting to have animal rights activist killed and shooting tigers
- European crackdown on counterfeit and smuggled pharmaceuticals results in seizure of 34.5 million drug units
- If the UK press is so racist, why do Prince Andrew’s alleged wrongdoings generate so many more column inches than ‘Asian’ grooming gangs?
- Police in Spain smash sham marriage network that charged migrants €12,000 for bogus nuptials
9 February 2018
9 February 2018
8 February 2018
28 November 2017
28 November 2017
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