Advisors.ie

It was once thought that the black market was a big city problem and restricted to the kind of activities you see on the show Love/Hate, but now we are told that in Waterford city that 45% of all cigarettes consumed are illegal imports (smuggled and non-taxed). The Fine Gael TD Damien English made a statement on this saying that ‘The black market destroys sales and makes jobs more vulnerable, undermining the gains made from job creation schemes‘. Estimates at the value of cigarette smuggling are at about €3,000,000 a week worth being brought in. But it makes a person wonder why anybody would smuggle cigarettes? Why not packets of lemsip, or bags of potatoes? The reason is actually down to the government themselves, Ireland has the highest rate of excise on tobacco in all of the EU, out of a €9.00 box of cigs a whopping €6.71 is tax, meaning the actual market cost without tax is only €2.29 which if only VAT was applied would make it about €2.80. What this tells us is two-fold, firstly is that the incentive is actually created by the state and secondly is that people feel ripped off enough to engage in illegal activity, in both smuggling and buying these products. You can’t turn honest people crooked without giving them some good incentive to do so, call me old-fashioned, but I do believe that. And it isn’t small beer either, almost 25% of all cigarettes consumed are from the black market. So is the answer to deploy state resources that don’t prevent this from happening or to reconsider the taxation and put it in line with other European countries thereby taking the profit out of the business which would do more to destroy it overnight?
(taken from our Sun on Sunday column)