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Elephant in the room

| March 1, 2011

A recent conference on illicit cigarette trade dodges the real issue.

By George Gay

I’d like to start this piece by asking a question. Would you want to live in a country where the government encouraged people to break the law and then used the law to punish those people?

Probably most if not all of the people reading this story would answer “no” to this question but would then add that no government would do such a thing because it would be against its own interests.

OK, let me put the question another way. Would you want to live in a country where the price of an addictive but legal product was purposely raised by the government, through taxation, to a point at which the financially less well off users of that product could not afford it, were therefore forced to access illicit sources of supply of that product (they are addicted, remember), and were subsequently hunted down by a number of government agencies—perhaps after having been reported by informants—and then subjected to the full force of the law? (I don’t mean this to be taken as a rhetorical question. Please e-mail me at george@tobaccoreporter.com. It’ll take only a minute. All you need to write is “yes” or “no.”)

The reason why I ask this question is that I am beginning to wonder whether I inhabit a universe parallel to the one inhabited by many other people. I certainly don’t want to live in the sort of society described above, and I would have assumed that most other people would not have wanted to do so, but I was recently at a conference that seemed to be devoted to maintaining such a society in the country where I live. The Anti Illicit Trade Summit was staged by the think tank Progressive Vision in association with the Tobacco Manufacturers’ Association on Jan. 31.

It would have been easy to accept what went on at the conference if all of the participants had been unpleasant, but they weren’t. Everyone in attendance in the comfortable surroundings of the Liberal Club, just off Whitehall, London, was polite, intelligent and, as far as I could tell, well meaning.

Avoiding the real issue

But clearly, to my way of thinking, there was a problem here, and perhaps it resided in the fact that the besuited are unsuited to understanding the motivations of the impoverished consumers of illicit tobacco products, especially from the viewpoint of the Liberal Club.

But the disjoint went much deeper than this, I think. When Simon Clark, the director of Forest, stood up toward the end of the morning session of scheduled presentations and suggested, quite reasonably to my mind, that the event seemed to be avoiding the elephant in the room, taxation, it was as if he’d lit a cigarette before the loyal toast.

There was certainly a reluctance and, in part, a refusal to discuss taxation. Of course, this was understandable up to a point in respect of those working with government agencies, who, presumably, are bound not to criticise their employer’s policies, no matter how dotty they might be. But for the rest, it seemed rather lame.

Summing up at the end of the day, the chairman of the event, Jonathan Charles, a BBC presenter, made the point that the issue of illicit trade in tobacco had to be approached with realism because the government wasn’t going to backtrack on its taxation policies in respect of tobacco.

I was astounded. Charles’ realm of realism is not one I want to inhabit. Where is the ambition in this kingdom? Thank goodness we weren’t relying on Charles in 1215 or we’d not have got King John to put his seal on the Magna Carta. We’d still all be being bled dry with taxation as our leaders prosecuted expensive and largely unpopular overseas wars. Hmm … plus ça change.

Diverting attention

But in a way, Charles was right. He’d done his job and summed up the mood and the tone of the conference. Whatever you do, don’t mention the fact that the chancellor isn’t wearing any clothes. Let’s talk only about how bad are those who are trying to avoid paying unconscionable amounts of taxes and the people profiting from this activity.

Let’s talk about the pointless exercise of explaining to smokers the unsupportable idea that counterfeit cigarettes are more harmful than are other cigarettes. Let’s talk about how some illicit cigarettes contain rat droppings, whether there is any evidence to support such an idea or no.

Let’s talk about how a BBC crew recently came under attack from somebody allegedly involved in the illicit trade in tobacco as the members of that crew were doing their job in investigating this trade. Really? So what? This is a dog bites man story; it’s hardly a revelation. So the bad boys are violent. Well actually we knew that; it goes with the job. But they wouldn’t have that job—not the tobacco job at least—if the government hadn’t given it to them.

And it has to be borne in mind that the BBC would probably be attacked if it sent a crew to investigate why those at the treasury are applying tax levels of up to 90 percent on the retail price of a pack of cigarettes and then wondering why people thrown out of work by the government’s policies are trying to avoid those taxes. Of course, the BBC won’t be attacked by a treasury man wielding an iron bar, but it would do well to be on the defensive when its funding comes up for review.

From my observation—and I have to admit here that I attended only one of three breakout sessions during the afternoon segment of the one-day conference—there seemed to be little thought given to the idea that we could rise above coercion and retribution to extricate ourselves from the mess that we have got into over the illicit trade in tobacco. If we want to stop the illicit trade, why can’t we investigate taxing smokers rather than the products? Why can’t we consider the possibility of applying a sliding scale of tobacco taxes based on a person’s income, given that smoking is addictive? Why can’t we allow each smoker to buy 10 percent of her cigarettes from illicit sources, rather like we allow motorists to drive at 10 percent above the speed limit without being punished? Why can’t we look at making cigarettes expensive ex-factory by forcing up the price of tobacco?

Are we completely devoid of imagination? Do we not have the wit to look at these problems from other directions? Are we content to have our beards plucked off and blown in our faces by the men at the treasury? Are they not supposed to serve us?

Why do we have to bleed dry the already-financially poor so that we can keep our banks on drips? Where is the justice in that? Where is the quality of mercy?

The conference was told by HM Revenue & Customs that, since the start of its anti-fraud campaign in 2000, 3,300 people had been “successfully prosecuted.” I don’t know how many of these people were master criminals and how many were ordinary folk, but if this is success, I don’t want to see what failure looks like. This is not a success; it is a social disaster.

Scepticism

Above, I opined that the U.K. had got itself into a mess over the taxation issue, but we are by no means alone. Writing in The Ottawa Citizen earlier this year, Don Butler reported on the findings of research commissioned last year by the Canada Revenue Agency that found that most young Canadian smokers are very familiar with black-market cigarettes and that many support their sale. And these young people are deeply skeptical of government assertions that contraband cigarettes are linked to organized crime.

And from what I heard at the conference, opinion in Britain is much the same. How proud can we be of this? We have overseen a situation that has led to many of our young people believing that breaking the law is OK and that the government lies to them.

This lack of trust is concerning, and concerning beyond tobacco. It is easy to laugh off such skepticism and say that nobody trusts politicians, but there needs to be some trust. In a report to the executive board of the World Health Organization earlier this year, the WHO’s director general, Dr. Margaret Chan, said that during this winter season in the northern hemisphere, some countries saw cases of severe H1N1 disease in a comparatively young age group. In some cases, she added, persuading the public to seek vaccination had become even more problematic than during the pandemic. The problem of public mistrust extended well beyond influenza vaccines.

Of course it does. And, in part, that mistrust is fed by misinformation put out by governments and their agencies. Often, I’m certain, this misinformation is put out with the best of intentions by people who genuinely feel that they have a mission to stop others from smoking at any cost, but such misinformation simply comes back to haunt them. And anyway, I don’t wish to be unkind, but I would suggest that these people need to give some thought as to whether they shouldn’t mind their own business.

We need to understand that people are not stupid. They just need to be told the truth so that they can make informed decisions. And for that to happen, those doing the telling need to be able to recognize the truth, which is not always easy.

At the end of the conference, the chairmen of one of the breakout sessions referred to the illicit trade problem as manifesting itself in Britain but arising overseas, which I took to mean that the illicit tobacco products were being manufactured largely overseas but sold in Britain. I’m willing to believe that the products are arriving from overseas, but “the problem” is not arising overseas. The problem is being manufactured at home—goodness knows, we even know the number of the street in central London where it occurs.

And take the often-used expression: nobody benefits from the illicit tobacco trade but the criminals. At first glance, this seems to be perfectly true, but you could just as easily argue that because of the situation we find ourselves in, everybody in the country benefits from this trade. It is the glue that holds everything together. If there were no illicit trade, those addicted smokers who could not afford licit cigarettes would have to break into shops or mug people on the streets for their smokes.

I know that some people argue that addicted smokers unable to afford cigarettes can avail themselves of help in curing their addiction. But there is a problem here—time. Taxes go up overnight, but, according to a recent survey carried out by the U.K.’s Lancaster University, it takes the average smoker five years and seven attempts to quit smoking.

The government of the U.K. is currently promoting a favorite idea of Prime Minister David Cameron, called the Big Society. Cameron has come in for a lot of criticism over this idea because it is seen as being not fully thought out. People are moaning because little detail has been given. But I’m a fan of the idea. And I think that many of the critics are missing the point. This is about the Big Society. It is an idea for us to pick up and run with. If Cameron provided the detail, it would be Big Government—more Big Government, and we have spadefuls of that already.

But the government has to help. We cannot create a Big Society in a country where we are more and more being subjected to Big Brother: a society with paid informants, infiltrators, undue surveillance and law enforcement agencies by the truckload. And especially we don’t need taxation policies that can lead only to law breaking. This is the road to the Broken Society, the ailment that Cameron says he wants to cure with the Big Society.

Toward the start of this piece I suggested that the Liberal Club might not have been the right venue to discuss the illicit trade in tobacco. It wasn’t. The next one should be held at Runnymede (which, for our non-U.K. readers, I should explain was where the Magna Carta was sealed).

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