Sunday, October 28, 2012

Supply and demand #2

I'm always amazed that the government and its minions cannot understand why taxing something into the ground or making something illegal often backfires. By making a legal pastime prohibitively expensive through punitive taxation or as in the case of drugs making them illegal, all they do is drive honest people into the hands of the criminal fraternity, though despite the fact that the police and government call them criminals, often enough they are just service providers for something the public want.
ALMOST half of Britain’s most wanted tax fugitives are cigarette smugglers who have dodged duty running into hundreds of millions of pounds.
Figures from HM Revenue and Customs show eight of the top 20 tax avoiders were convicted of illegally importing cigarettes.
The figures have been seized upon by campaigners opposed to plain cigarette packets because it could fuel smuggling.
The list of tax targets includes Hussain Chohan, 44, who has joint British/Pakistani citizenship and is now said to be in Dubai. He failed to appear at Birmingham Crown Court for a £200million fraud in 2006.
Chohan was tried in his absence and given an 11-year sentence for smuggling 2.25tons of tobacco worth £750,000 in lost duty.
Gordon Arthur, 60, and Emma Tazey, 38, both British, were arrested for a £15million tax fraud. Customs officers seized seven million smuggled cigarettes in 1999.
Another 21 seizures of alcohol and tobacco have been attributed to Arthur, worth £5.5million in duty. They skipped court bail and are said to be in the US.
It's a classic case of the law of supply and demand, the government have made the price of a legal product exorbitant and naturally created a market for those who are prepared to sell it cheaper by smuggling it in. Nor do they get any sympathy from me with their bleating about lost tax revenues, what they never had, they cannot miss. Lowering the taxation would get them more revenue regardless, as people would again buy from the shops, rather than a man in a van. They can dress up their campaigns in all sorts of fancy language from health to NHS costs, but like prohibition in the USA if it goes against what all or some of the public want to do, then the public will go to those who will supply their needs despite the lack of quality control and/or health risk. Same with those who want drugs or alcohol, if the government make it difficult then someone will provide the service.
The government and the health Nazi's have made a rod for their own back, they are trying to force people in a direction they don't want to go. Ultimately all they are doing is depriving the government of revenue and enriching those who will supply the people with what they want, illegally or not...

4 annotations:

Anonymous said...

Cigarettes are, I believe, a personal choice issue because they do not cause the user to act in dangerous ways which might be directly harmful to others, as do narcotic drugs.

However, with regard to narcotic drugs they have and do cause great suffering and much death and destruction to innocent parties. Making narcotic drugs legal would probably not stop this as no one could be monitored to ensure that they used drugs in a safe way. It is also possible that the number of users would increase dramatically and therefore the number of harmful events (caused to other people by drug users) could also increase.

The argument also is applicable to all other criminal acts - what about paedophilia? Paedophiles think that their behaviour should be decriminialised (just like illegal drug supply and use) but I would guess that most people would find this beyond the pale. What about petty theft - doesn't harm people really, everyone's insured, aren't they?

The problem with the 'let's decriminalise it' argument is that it does not work because you end up with dangerous activities becoming legal with no consequences for the perpetrators.

Quiet_Man said...

Oh I'd just make addictive drug users register with a chemist for their supply. That way the product could be taxed and quality controlled.
Also we'd know who the real abusers were as opposed to the recreational ones. We'd also remove a source of funding for criminal elements that way too.

johnd2008 said...

If only the Government would learn from history.Smuggling was rife in the 18th century for precisely the same reasons, the tax was too high.
The solution is quite simple, reduce the tax and the need for smuggling goes away.

English Pensioner said...

Governments never consider the "Law of Unintended Consequences". They simply don't understand that people will react in the way most appropriate to their own circumstance, not necessarily in the way that government intended. In the case of cigarettes, the smugglers wouldn't exist if people weren't prepared to buy what they had for sale, but in this case sufficient people regard the government imposts as excessive with the result that smugglers can make a living.
The art of taxation is to have it at such a level that it is not worth the effort or the risk of avoidance - with cigarettes they've lost the plot!