International Cigarette Smuggling Rages Out of Control
NEW YORK (Reuters Health) - Only a multilateral convention similar to that used to control international arms sales can hope to stop billions of dollars in cigarette smuggling, researchers report.
``Smuggling is not a small phenomenon: we have estimated that, globally, a third of legal cigarette exports disappear into the contraband market,'' write Luk Joossens from the International Union Against Cancer in Brussels, Belgium and Martin Raw from the University of London, UK.
Contrary to tobacco industry arguments, the researchers suggest that smuggling is not caused by market forces--the demand for cheaper cigarettes. Instead, they explain, it is driven by an overwhelming supply of illegal cigarettes, ``caused mainly by fraud through the illegal evasion of taxes.''
Rather than trying to diminish illegal cigarette sales, the writers assert, ``tobacco companies view contraband markets as simply one area of market competition.''
The tobacco industry suggests that lower taxes would reduce smuggling and increase tax revenues, but the authors contend that the exact opposite is the case. When Canada reduced cigarette taxes in 1994, teenage smoking jumped from 16% to 20% and federal tax revenues fell by 1200 million Canadian dollars.
The researchers point to Spain as one of the few countries to tackle the cigarette smuggling problem. How did Spain stem the tide of illegal cigarette smuggling from neighboring Andorra? By sealing the Andorran border, stepping up patrols in the smuggling routes, and pressuring the Andorran government to pass laws against tobacco smuggling, according to the October 14th British Medical Journal essay.
As a result of these measures, contraband cigarettes lost more than half of their share of the market, while legal cigarette sales and tax revenues increased by 25%, the report indicates.
``As we have shown,'' the authors conclude, ``the real problem is fraud, and the real solution must therefore be to control, through international treaty, the transport of this valuable and dangerous product.''