Smoking taxes make cigarette smuggling an increasingly attractive option

Sydney, 17 May : When a government treats citizens like criminals they tend to respond like criminals. The federal government, as large and intrusive as it has ever been, has helped create an underworld trade that is costing multi-billions of dollars.Every week, the equivalent of one full container of illicit cigarettes is smuggled into Australia. There are only guesstimates about the size of the trade because smugglers don’t do bureaucracy.The retail value of that standard container load of cigarettes, if sold legally, would be about $10 million dollars, such is the cost of a pack of cigarettes these days. On the black market, that container load would be worth about $4.5 million. The cost of acquiring the cigarettes in Asia would be only a fraction of its street value. So the amount of profit from that one container load is enormous. The risk-reward motive is self-evident.
Given that Australian Customs only has the capacity to inspect about 5 per cent of the containers that arrive in Australian ports, even if one in three containers of illicit goods were intercepted, the operational loss is still small compared with the gains.It costs around $2.80 to buy a packet of Marlboro cigarettes in China, the world’s largest producer and market for cigarettes. The retail price in Australia is $20.60, almost 10 times higher.The bulk of this price chasm is Australian taxes – $14 per pack in excise and almost $2 in GST. So 90 per cent of the difference is taxes. It would be hard to find a clearer price signal to establish a black market. The profit potential is enormous.
The government then also subjects consumers to horror porn, via mandated plain so-called packaging which is anything but plain. Packaging must, by law, depict images of advanced, deforming diseases.Thus the massive price mark-ups, the de facto criminalising of tobacco growing, and the state-imposed disease porn, is a classic example of a rampant nanny state passive aggression, where imposition is justified as For Your Own Good, for a product which is legal to consume and, indeed, widely consumed. About one in eight adult Australians are regular or irregular smokers (Australian Institute of Health and Welfare). That’s about 2.5 million people over the age of 14 who have made their own calculus of risk and reward.