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.

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  • Judith - 2012-04-16 07:58

    I think you meant meths not maths Chris, although it would be great if they did turn to maths and away from alcohol! Completely agree with your take on this. And banning advertising will not work either

      Malcolm - 2012-04-16 08:57

      No please don't let our population turn to maths! Anything but that, this madness must be stopped! On a serious note though, yes all that this sort of thing really achieves is to breed contempt and turn people into criminals. Laws and taxes are something that should be thought long and hard about, not something that can just be made up on the fly without thinking about the long term consequences. (Sadly our current leaders don't even know how to spell the word thinking)

      louis.langenhoven - 2012-04-17 16:20

      janee when people start turning to maths you must know you've had it!

  • Buzz - 2012-04-16 08:52

    Booze, smokes and other drugs are not going anywhere. The people want want they want. "The only way that the vice of society can be cured is by peer pressure and social unacceptability." Is this in pursuit of a perfect society in which individuals are far from perfect? Tax to death, prohibit, persecute.... whatever. It won't stop the demand. The questions are "How far is society prepared to go in order to impose selective morals? How much of our nose will we cut off to spite our face? At what point do our ambitions of perfection do more harm than good?"

      Vaaldonkie - 2012-04-16 15:41

      Right at the point where you make a government the arbiter of morality.

  • brionyl.french - 2012-04-16 08:54

    You my friend need to go sit in government! Because you my friend speak the truth... I know of many people who have resorted in this country to illegal cigarettes because life here has just gotten too expensive... Everything goes up more than 10% yet our salaries barely increase by 5% how logically does this make people survive? They dont! And thus they end up breaking the law just to survive....

  • gerry.pelser - 2012-04-16 09:19

    Again the failings of the nanny-state. When will people learn that you cannot legislate morality, and you cannot tell consenting adults what they can and cannot do. You may make it illegal, but it won’t stop people from doing it. I’m also highly cynical of the concept an “illegal” cigarette. All that means is that the big monopolies have not manufactured them, and no one has paid taxes on them. Open the market so anyone who wants to can manufacture and distribute cigarettes, and “illegal” cigarettes won’t be a problem anymore! Please, mother grundies, you of the nanny-state, realise this. You cannot stop consenting people from consuming a legal product, no matter how hard you try. In fact, quite the opposite, by making the products “undesirable” you create a false market and suddenly the very people you are trying to protect (gee thanks, but we don’t need your protection!) are suddenly the very consumers of your vice. No one wants to smoke because its so damn uncool. But when you *make* it cool by telling people just how verboten it is, and forcing them to go underground, now THAT is cool. “Look at me, I managed to get a pack of cigs from my supplier” is infinitely cooler and socially acceptable with the in-crowd than “I just bought a deck of Marlboros from the corner cafe”. Ho hum. Wake up! Leave the repressive laws and taxes and you will get the outcome you desire. People can, and will, regulate themselves by their own volition if you just allow them to!

  • billidp - 2012-04-16 10:07

    Why should I pay R30 for a pkt of cigs when I can pay R6-50?

      Cayowin - 2012-04-16 17:18

      An interesting question, you are arguing that an illegal act - buying illegal cigs, is ok as long as they are cheap So by your logic, why should i pay 100k for a car when i can pay 20k for a stolen one? is a legitimate question. It depends on your own personal morality. At one end is the question: Why should I not kill you and take the cigs for free? Why should I not steal the money to buy the cigs? Why should i not defraud an insurance company to buy the cigs? Why should i not rob a drug dealer to get the money? Why should i not lend the money from a friend, knowing i will pay them back "someday" I try to live my life as a moral, ethical human; i do not achieve this high and lofty goal but i try. And i personally have the opinion that SA would be in a better state if more people realised why committing a crime is a bad thing.

  • justin.pretorius - 2012-04-16 10:23

    Great article! What is now shocking is that hard drugs are becoming cheaper in comparison to booze and cigs. This is not to even mention the illegal cigs coming into SA. Remember prohibition years? What did it do? Of course, regimes don't really think too well sometimes about the consequences of their actions.

  • erneyb - 2012-04-16 10:48

    In support of your story Chris: Last week 4 - 40 foot maritime containers with 38 million contraband cigarettes were seized in Dublin port. This consignment represents a loss of R 136 mil. (Euro 13.1 mil.) to the exchequer. In 2009, 120 million contraband cigarettes were seized and 70 million in 2001. How many millions of cigarettes slipped through undetected ?

  • deon.fourie - 2012-04-16 11:47

    I'd love to know where I can get my hands on some of these illegal cigs? Anyone?

      Vaaldonkie - 2012-04-16 15:13

      At any tuck shop. I drive past three of them on my way to work.

  • Jack - 2012-04-16 18:56

    I’m also highly cynical of the concept an “illegal” cigarette. All that means is that the big monopolies have not manufactured them, Gerry.pelser hits the nail right on the head. What constitutes an illegal cigarette? Is a cigarette not simply a tube of paper filled with a form of tobacco?

      Ze Don - 2012-04-17 08:50

      It should actually read as illegal tobacco products. A cigarette is deemed illegal when taxes haven't been paid on them by the manufacturer or importer.

  • John - 2012-04-16 22:49

    I think it really "un-comrade" like of anyone to consider buying "illegal" cigarettes and avoiding the 75% tax that should really go to that ministers new car, or holiday, or his wife's car, or nephews car or maybe his new house, it may also have been part of his other wife's "bonus". Shame on you all for being so capitalistic and wanting to buy an identical product at 25% of the price!

      Ze Don - 2012-04-17 08:51

      Viva comrade, Viva!

  • Lanfear - 2012-04-17 10:15

    Several of my friends and family have stopped smoking over the past decade. And not ONE single person stopped because smoking became too expensive! They all stopped for health reasons and the saved money is just a bonus. I well remember the days when I swore I would stop smoking when it reached R10 per packet. Well, now I pay R29.50 per packet and I still smoke. The only reason I haven't bought illegal cigs yet is because I know the kind of chemical crap in there is much worse than in legal cigs. You can actually taste it... You are completely right though Chris. Taxation and advertisement banning will do nothing to stope people's "vices". In the end of the day, people will always have some sort of vice, as it is usually a form of escape from circumstance. Pushing the prices upwards like this only creates a vast illegal market.

  • louis.langenhoven - 2012-04-17 16:26

    all this talk about ciggies makes me feel like smoking- do one still get El Cano cigarillos?

  • Goerge - 2012-04-21 17:04

    Now they want to tax the "freeway". Black market etags and license plates will soon pop up :)

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