Taxation and illicit tobacco in Georgia

Often when reading research papers I think “Bullshit” or “Unbelievable” but I seldom laugh out loud. Today I laughed out loud when reading this abstract from an issue of Tobacco Control.

To be fair, the issue of illicit tobacco is important and should be investigated.  Dodgy research isn’t in any one’s interests – not short term interest and definitely not in anyone’s long term interest. The problem as I see it is that the public health lobby have become so obsessed with destroying the tobacco industry that they are unwilling to concede any argument at any margin.

So here is the claim:

Tobacco taxes are critical in reducing tobacco consumption, thereby improving public health. However, the tobacco industry claims that tax increases will increase illicit tobacco trade. Therefore, research evidence on the size of the illicit cigarette market is needed in Georgia and other low-income and middle-income countries to inform tobacco tax policies.

Completely agree.  Not just the tobacco industry mind you, economists going all the way back to Adam Smith have argued that excessive taxation gives rise to smuggling.  So how do our researchers approach the problem?

Smokers were asked to show available cigarette packs to the surveyors. These were examined for tax stamps and health warnings which allowed for an assessment of illegal cigarette consumption in Georgia.

The researchers went to houses, knocked on the door, and asked the inhabitants if anyone in the house hold smoked and if so, could the researcher see the packet. Now that is a simplification but in essence that is the method. So a stranger comes to your door and asks if you or anyone in your household is breaking the law.  The result?

The packs shown to surveyors suggest illicit cigarette trade is low (1.5%), although with regional differences, as illicit cigarette packs were present in 6% of the households in Zugdidi. 

That is a very surprising result.  But that isn’t what made me laugh. This did:

This estimate might be conservative, as 28% of respondents did not show any packs to the surveyors.

28% of smokers didn’t have any cigarettes at home? There is a further ‘limitation’ of the study reported in the main body:

A limitation of our study approach is that we could not test the tax stamps for their legitimacy due to limited budget.

So what they found is the very obviously illicit tobacco and not the better quality fakes and forgeries while missing the 28% of respondents who effectively refused to show their packets.

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11 Responses to Taxation and illicit tobacco in Georgia

  1. C.L.

    Millions and millions of cigarettes are being shipped into Australia every year by gutsy and enterprising businessmen. They are not ending up in landfill.

  2. John Constantine

    State paramilitary death squads knock on your door at daybreak.

    “Citizen, do you love Comrade Shorten and his politburu, and their glorious ten year plan?”

    “Love him truly and with all your heart?”

    Answer truthfully, the penalty for unsound answers is re-education.

  3. Goanna

    It is absolutely incredible that it’s illegal for a man to grow some tobacco in his backyard.
    The civil disobedience of smokers is to be applauded.

  4. Confused Old Misfit

    improving public health

    improving government revenue is what it is really all about.

  5. John Bayley

    In other news, 97% of climate scientists agree that global warming is man’s fault and will result in the end of the world as we know it.
    Unfortunately the data that unequivocally proves this was not available at this time.
    The science is therefore settled.

    Anyone else here see the irony of what passes for ‘science’ these days?

  6. Bruce of Newcastle

    28% of smokers didn’t have any cigarettes at home?

    It’s probably even worse. When someone official comes to your house, where you have been smoking illegal tobacco, and they ask you do you smoke what are you going to say?

    I suspect a good chunk of the “non-smokers” and the poll refusers will also be using smuggled stuff. People aren’t stupid even if tobacco academics seem to be.

  7. Tim Neilson

    There used to be a survey done in Australia where all the empty packets and pouches in a number of large areas were collected, and sorted into legal/contraband.

    That was said (plausibly) to give a good indicator of what proportion of tobacco being consumed was illegal.

    There are of course figures for legal tobacco, so simple arithmetic enabled an estimate of illegal tobacco consumption.

    I believe that’s no longer done. As best I can discover, the last one published tracked a period shortly after plain packaging and a large excise increase, and showed a rise in overall tobacco consumption – a slight fall in legal consumption being more than offset by a rise in illegal consumption.

    The official line was that there were doubts about the methodology. Those familiar with the “progressive” mindset know what that means – the methodology didn’t produce the desired result, so a new survey technique would be developed by reverse engineering from the desired result back to a methodology which, no matter how spurious, would give the answer required for the desired ratcheting up of oppression of ordinary citizens.

  8. areff

    illicit cigarette packs were present in 6% of the households in Zugdidi

    As goes Zugdidi, so goes the nation.

    Zugdidi? Was the town named after a rap star?

  9. Bruce

    As I recall, here in Oz, the Federal and State government “take” from their depredations on the legal tobacco and booze market far exceed the annual “health” bill, (complete with “spillage”) for the entire country.

    One could be forgiven for suspecting that our “betters” are not serious. Serious pests, most certainly, but that’s about all.

    And then there is the outright rape and pillage that is the state of “Fuel excise and taxes”. Better roads? Riiiight!!! Better driver training?….Crickets…..

  10. Entropy

    On the bright side the researchers got a funded trip overseas.

  11. RobK

    Along similar lines, farmers in my area are subjected to severe land clearing controls under the EPAct on the one hand, then asked to notify the authorities of any rare and endangered flora or fauna on the other. The boffins dont think these things through very well.

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