ASH scornful of tobacco industry calls for reduced tobacco tax to tackle smuggling
20February 2001: 00:01
Tobacco industry calls for reduced taxes to tacklesmuggling – “it will increase smoking, reduce revenue and, most of all, itwont work” says ASH.
Asthe tobacco industry today visits the Treasury to press its case for a U-turnon tobacco tax policy, ASH warns the Chancellor to stand firm and recognise thetrue source and beneficiary of cigarette smuggling in the UK – the tobaccoindustry itself.
TheTobacco Manufacturers Association has estimated cigarette smuggling levels bypicking up discarded cigarette packets at six football grounds in the UK. Itwill be presenting its findings to the Treasury today, 20thFebruary, together with a call for an inquiry into tobacco tax rates.
ASHwas scornful of the tobacco industry’s approach and its arguments. ASH Director Clive Bates said:
“We don’t need the tobacco industry to tell usthat cigarette smuggling is at an unacceptable level, especially using such aridiculous and flawed approach. What isimportant is how best to tackle this problem, and the government would be naïveto take advice from an industry that profits from smuggling and whose maininterest is securing lower rates of tobacco duty in order to increase totalsales.”
“Varying duty rates to try to control smuggling amountsto a capitulation to crime” said Bates, “and it will increasesmoking, reduce government revenue and do almost nothing to reducesmuggling.”
ASHpointed out that in contrast to the popular perception, most cigarettesmuggling (80%) is not cross-channel bootlegging, but large-scale containerfraud perpetrated by organised crime syndicates. With this type of smuggling, entire containers of 10 millioncigarettes are exported from the UK to outside the EU and return disguised assome other product. With this type of smuggling duty is avoided completely, andthe criminal incentives are much less sensitive to reductions in duty thancross-Channel bootlegging, which relies on the difference between UK andcontinental tax rates. This type ofsmuggling explains why countries like Italy and Spain have high levels ofsmuggling with low levels of tax.
“If the government followed the advice of thetobacco industry and cut duty, there might be a reduction in cross-channelbootlegging, but large scale fraud would simply increase to supply thebootleggers’ customers, and there would be no net impact on smuggling. There would certainly be an increase insmoking and loss of tax revenue.”
“The real question is how do so many billions ofcigarettes reach the Mafia families of Eastern Europe, Italy and Africa? Why dothe tobacco companies export billions of cigarettes to countries where no-onesmokes them and the only obvious customers for containers of cigarettes arelarge scale smugglers?”
“The real challenge is to hold the manufacturersand exporters accountable for exports that end up in the hands of theMafia. We would soon see UK tobaccosmuggling in decline if that happened.
Contacts: Clive Bates, ASH, 020 7739 5902 (office) 077 6879 1237(mobile)