English
Italiano The Theorem of Smuggling
Looking ahead to a possible increase of the excise tax on cigarettes, the campaign continues on the “risks” that could derive from such a move. One of these is that Big Tobacco would be obliged to raise its sales prices and this would lead to a growth of smuggling.
In spite of the reassurance of the Guardia di Finanza, of the Ministry of Economic Development and of the AAMS, that speak of Italy as a “happy island” on the smuggling front, for the three multinationals that hold 99% of the Italian market, Philip Morris, British American Tobacco and Japan Tobacco, for the distributor Logista Italia and for the Italian Tobacconist Federation, the concern is “serious”.
In Italy tax revenues from tobacco products are lower than they could be, while the manufacturers earn like tax collectors. The European Union says that Italy “safeguards the profits of the manufacturers sacrificing tax income”. But at the convention «Il contrabbando e la contraffazione di sigarette» (Smuggling and the Adulteration of Cigarettes) held in Rome last November 10th, BAT stated that the increase of taxes “would force the producers to readjust their cigarette prices and this would encourage consumers to buy illegal products”.
The State should let Philip Morris continue raking in profits of 495% on its Marlboros, otherwise, with an increase of fiscal pressure, the producers would be forced to raise their prices to continue to earn as they did before. And with higher prices in the shops, smuggling would grow.
But actually, the contemporaneous liberalization of the market, established by the European Court of Justice and by Community Directives, would force the producers, because of free competition, to not raise their sales prices, but rather to reduce their profits in order to remain competitive and not lose market share.
Smuggling: Big Tobacco no longer does it... almost
The phenomenon of cigarette smuggling, following the boom of the 1990s and the consequent repression by the State, is “under control”. Big Tobacco penetrated the European market with contraband, but now it says it has stopped smuggling.
From 2004 to 2010 “anti-contraband” agreements were signed between the European Union and all the biggest smugglers of the sector: Philip Morris, Japan Tobacco and BAT. These agreements, besides the payment of relatively modest sanctions to forget the past, call for:
A) the pledge to not smuggle and to not favor smuggling,
B) the payment of high penalties for each container of contraband cigarettes of their brands that might be discovered.
And in these past few years, it seems that not many containers have been discovered. According to the Guardia di Finanza, today smuggling is prevalently “artisanal”; the loads arrive hidden in trucks, campers and cars, in the bags of travelers on trains and busses coming from Eastern Europe and the cigarettes are destined mainly to immigrants living in Italy.
We must think carefully when journalists, politicians, foundations and organizations warn us about the possible risks of higher taxes and smuggling. Often without realizing it, their efforts are useful to defend the profits of foreign cigarette manufacturers, seriously damaging our country.
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