On illegal tobacco undermining legitimate sales

Sheila Duffy once more attempts to make a case that tobacco retailer groups are only arguing against tobacco control because they are supported by tobacco companies. And fails.

After a long and loud campaign telling their members that counterfeit tobacco is damaging local shops, the TRA asked shopkeepers whether they thought their shop was at risk of closing due to counterfeit and smuggled tobacco. 

We are not told how those involved made sure of an unbiased sample or whether they just relied on their existing friends and contacts.

Of those who responded, 92 were from Scotland.

So the dramatic “one in ten” headline is based on nine individuals across Scotland giving their personal opinion.

That kind of survey sounds like the way thirdhand smoke was invented: the difference being that the fairy story about high taxes making opportunities for black market traders is written by the Tobacco Retailers Alliance, and the other story is created by somebody wanting to create a bad press around tobacco, and using the 'scientific' press to achieve it.

It is true of course that people giving opinions does not make fact. The argument that illicit tobacco results from high taxes has the benefit of being plausible. The hypothesis that higher taxes on tobacco creates opportunities for illegal traders cannot be argued by suggesting that it is generated solely by tobacco companies and their associates. Black market opportunities arise when there is a large gap between the production cost and the official price, and that gap is deliberately enlarged in the case of tobacco, since high taxes are meant to be a deterrent, especially to the young. The larger the gap between production and retail costs, the more illegal traders will be able to live comfortably off the margin. Tobacco control advocates must show evidence to refute this logic – it is not enough simply to deny it simply on the grounds that tobacco companies claim it to be true.

Nor is it convincing to say that HMRC deny any increase in smuggling. How can HMRC comfortably give estimates about how much illegal trading goes on, when it is by definition part of the mission of the illegal trader to slip under the radar? And how can HMRC confidently state that less smoking goes on? (or that people are not abandoning tobacco in favour of more dangerous substances)? Nothing appears straightforward in the world of illicit tobacco detection.

In the world of Smoke Free North East, the story that tobacco smuggling is under control no doubt has a robust following. The number of smokers is declining too (isn't it?). An independent survey that Smoke Free North East commissioned gives heartening news about the decline in illicit tobacco that you can read here. Deborah Arnott of ASH throws in her wisdom:

This survey is important new evidence that Britain is getting to grips with the illicit tobacco trade. Thanks to hard work by customs, trading standards, police, health and tobacco control groups around the country the level of tobacco smuggling is continuing to fall. Every independent survey shows this.

Can this be interpreted to mean that any survey not showing the UK getting to grips with the illicit tobacco trade is by definition not funded appropriately and is not to be trusted? Surveys (which produces a limited range of answers on a basis of self-selection) do feature reliable results sometimes, then, in the eyes of tobacco control?

The Irish got it wrong again

First of all, as the Chief Medical Officer will confirm, the smoking rate is as high in Ireland as it was in 2004 when the smoking ban came in. All the years of losses to the hospitality trade have succeeded only in moving secondary smoke exposure to the domestic sphere – it's got to be happening somewhere!

Second, according to a report commissioned by the Irish Heart Foundation, the Irish Government has mistakenly frozen the duty on tobacco for the last two years in the belief that raising revenue would drive customers to the hands of illegal sellers. They claim as evidence a 9 per cent rise in tobacco revenue in 1995-2005 at a time when tax on tobacco rose by 11 per cent. It seems a bit odd that the Irish Heart Foundation should be complaining of lost earnings to the Treasury from tobacco revenue resulted from this ill-advised failure to raise duty, but they also claim that a rise in duty of one euro per 20 cigarettes would lead to 30,000 ceasing to smoke. The result: loads of extra money and huge savings in health costs and benefits.

So will the Irish compound their error by increasing the price of tobacco until it's about four times the level it is in, say, Hungary? Who knows?

The Irish Heart Foundation actually commissioned this study specifically to challenge the Irish Revenue Commissioners' conclusions that only smugglers would benefit from an increase in tobacco duty. How the report calculates the price elasticity of tobacco with the result that a jump in price will lead to 4 per cent of smokers giving up is beyond me. I am too stupid even to understand how or if they even attempt to take illegal tobacco sales into account.  Unemployment is approaching 15 per cent in Ireland and raising the taxation on what is already overpriced is in my view very likely to encourage people to economise by buying legitimately elsewhere without the Irish Exchequer making any gains, or to buy illegally.

Studies, by the way, are a weapon to be produced when countries rebel against tobacco control. Last year the Dutch lifted smoking bans on unstaffed bars (because there were no staff at risk of secondary smoke exposure). Last month, from an EU-funded tobacco control project, came this lengthy chastisement of the Dutch government for failing to implement the Framework Convention on Tobacco Control, cutting smoking cessation funding, not using graphic images ... and here's the rub, shortening the lives of 145,000 over the next 30 years. The study in question uses a model to calculate the lives that would be saved by increasing taxation on tobacco and by funding smoking cessation services.

Calculations like these make the practice of threading a camel through the eye of a needle look like a fruitful and meaningful exercise.

Yes, Minister (Dublin version)

Discussing the budget, following the Irish government's failure to raise taxes on tobacco.