For those of us who still occasionally like to check in on what the mainstream media is doing, there has been a topic that has got chins wagging and jowls flapping lately: “the tobacco wars”.
While the mainstream media, in typical fashion, has sensationalised the story, it is true that black and grey market tobacco is abundant in the community.
BLACK, WHITE AND GREY
As a (recently quit) smoker, I see it everywhere. My smoker friends brag about the newest place they discovered, with even cheaper prices, while they pull a cigarette out of their fully branded pack. In fact, I can’t remember the last time I saw a drab-brown (plain packaging) pack of cigarettes. And I wouldn’t be much of a libertarian if I didn’t confess that I haven’t bought a pack of cigarettes through a shop compelled to display a “retail tobacco merchant license” in well over a year.
The obvious appeal of black and grey market tobacco is the near-two-thirds savings. I can buy a 20-pack of Marlboro Reds for under $20, while an authorised tobacco merchant is selling the same pack for over $50 (which I had to look up because it has been that long). And as more shopfronts pop up, the price is pushed down – a testament to the free market.
Anybody serious about removing the illicit tobacco market
Even your poorest friends can afford to smoke chop-chop, illegally grown roll-your-own tobacco, at 50c per gram – a sixth of the price compared to roll-your-own tobacco in the authorised market.
ALL IS FAIR IN LOVE AND WAR
Despite the fact that, I would guess, most smokers are paying less for cigarettes than they have in over a decade, there are serious concerns that accompany a rising illicit market for an addictive product. Bikies and organised crime groups are starting to muscle in on the market, aggressively extorting tobacco merchants (as opposed to the more passive extortion of tobacco tax) and violently vandalising competitors.
Stories of tobacco shops being vandalised and torched are becoming a near-weekly occurrence. And while I have little sympathy for organised criminals, it is not only criminals being affected: legitimate tobacco merchants are in their crosshairs and innocent victims are inevitably caught in the blaze. So week-in and week-out, the mainstream media trots out some new “expert” on the matter who declares another hair-brained measure will solve this problem once and for all.
One of the more popular new measures being touted is to implement a licensing system to regulate tobacco merchants, similar to booze. The one problem with that is it already exists and has done precisely nothing to stem the flow of illicit tobacco. In South Australia, where I live, we have a had a tobacco merchant licensing system for as long as I have been a smoker (15 years) and illegal tobacco – and the organised crime that comes with it – is thriving.
Even your poorest friends can afford to smoke chop-chop, illegally grown roll-your-own tobacco
STATING THE OBVIOUS
At the risk of sounding like another idiot who has the solution for this problem once and for all, there is actually an incredibly obvious solution to this problem: lower the price of cigarettes. There is only one way for those “evil”, “scary” big tobacco companies to sell their products at a loss and for merchants to make pennies on the dollar: abolish (or at least significantly reduce) tobacco tax. Well over half the price of the average pack of cigarettes or pouch of roll-your-own tobacco goes to the government in tobacco excise alone. Tobacco, like petrol, is also double-dipped on tax with an additional 10 per cent of GST.
So while even someone with a cursory understanding of economics knows the only way to combat this problem is to compete on price – especially in a market where almost all forms of non-price competition have been outlawed – the obvious remains unspoken. To even suggest we use the only realistic solution to combat the illicit tobacco market, while also removing the most regressive tax in Australian history, is complete heresy.
UP IN SMOKE
Instead, we’ll pile on more regulations, evaporating the few legitimate tobacco merchants left, and “crackdown” on illicit tobacco, as governments continuously claim to do for no avail. We have known for a long time now that prohibition never works, and now we know that a surreptitious prohibition, via ever-increasing prices, achieves the same result.
Anybody serious about removing the illicit tobacco market, preventing organised crime from gaining a foothold in another industry and legitimately saving the lives of those caught in the collateral damage, knows the answer to this problem. Now it’s time to say it out loud.
