Chris Moerdyk

Taxing our vices just makes more vices

2012-04-16 07:41

Chris Moerdyk

"Never before in the history of this country, have cigarettes been so affordable to our youth."

What? Cigarettes affordable? What on earth was this guy smoking?

Well, the guy in question is the head of  an Irish retail association and he wasn’t smoking anything.

Nor was he suggesting that the average of R70 that people in the UK and Ireland spend on a pack of 20 cigarettes, was affordable.

The thing is that because it is so expensive to buy cigarettes in the UK, there has been an enormous growth in contraband cigarettes - so much so that its becoming a big and very competitive business.

So, young people in Ireland not only find smoking affordable but they have pretty easy access to illegal cigarette supplies.

Which proves quite emphatically that if you tax a product high enough, illegal substitutes will start making an appearance.

Equally, if you are perceived to charge too much for something, consumers will look for alternatives and not give a hoot about whether they are doing something illegal or not.

Just look at all those pirated DVDs and CDs you can pickup on just about any street corner in South Africa, not to mention all those cars with Swazi and Botswana number plates cruising around  our roads.

What is happening in Ireland with cigarettes is already happening in South Africa. We can see it in the numbers. Our cigarette companies have been waging a campaign for years now trying to persuade South Africans to stop buying contraband cigarettes, which if you add up the amount of tax lost, amounts to a very conservative 20% of total cigarette sales.

And it is growing, because consumers today don’t actually give a hoot about whether the proceeds of illegal cigarette sales are supposed to be founding terrorist cells. They don’t give a hoot that cheap Chinese imports of everything from clothing to spray paint, is damaging our local manufacturing industry.

Impecunious consumers the world over go for the cheapest option - illegal or not.

Of course the anti-smoking lobby will huff and puff about no danger of over-taxation and will continue to gloat about how they have managed to reduce the incidence of smoking in this country.  But, when you add contraband sales to the official figures,  I don't reckon the war against smoking has been even remotely successful.

International trade in illegal cigarettes has been going on for decades. It is a global industry and attempts by governments and the tobacco industry to clamp down on it is farting against thunder.

The same is bound to happen in the liquor industry. One just has to look back at the United States in the prohibition years to realise that when  there is a demand something criminal creativity is inevitably streets ahead of law enforcement.

So, taxing  social vices to death does nothing more than create more vices.

I am willing to put my head on a block that in 10 years time when we look at things like alcohol consumption, substance abuse and smoking,  we will see that imposing huge taxes and banning advertising will have had absolutely no effect at all.

The only way that the vice of society can be cured is by peer pressure and social unacceptability.

All that seems to be happening as a result of increased taxation on liquor and tobacco is  that poor people are spending less on food, education and clothing as they keep on smoking and drinking. And if they can’t afford to drink beer or brandy, well there is always home brew and maths.

- Follow Chris on Twitter.

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