Mounting evidence shows that governments need radical new thinking to stop the contraband cigarette industry. The latest evidence comes from New York City where the city health department reports that the number of adult smokers has risen to 16.1 per cent from 14 per cent in the last three years. That is the highest percentage since 2007.
Taxes on a pack of cigarettes in New York City now total close to $7. The price for a legal pack of cigarettes in the city is $10.50 to $12. Contraband packs cost about $5.
A new U.S. Tax Foundation study shows that 57 per cent of cigarettes smoked in the State of New York are contraband.
The studies join stacks of others illustrating how contraband cigarette trafficking, one of the world’s most extensive and profitable industries, continues to foil extensive efforts to reduce smoking rates.
Governments and anti-smoking groups refuse to accept that the most effective weapon against contraband tobacco is lowering tobacco taxes. They say that lower tobacco taxes encourage smoking. Perhaps, but no one has tested the question of whether taxes can be lowered to reduce contraband while at the same time instituting programs that will help ensure a continuing decline in smoking.
Governments won’t reduce tobacco taxes because they are addicted to the revenue. In the U.S., federal and state taxes on tobacco bring in $35.3 billion a year. In Canada, the annual tax take is roughly $7 billion, not including sales taxes on tobacco.
Contraband tobacco not only encourages smoking but the futile law enforcement fight against it costs huge amounts of money.
New York City is just a recent example of the folly of high tobacco taxes. Contraband tobacco is in your neighbourhood, making it cheaper for people to smoke while building new criminal organizations. Governments need to try new approaches but addiction to the taxes and the constant shouting of narrowly focussed anti-smoking groups ties them to the same old thinking.
More on contraband and the history of tobacco can be found in Smoke Signals: The Native Takeback of North America's Tobacco Industry. (Dundurn Press)