Big Tobacco's black market theory goes up in smoke

Chris Macey

November 07 2013 02:04 AM

It's hard to fathom how an organisation that casts itself in the role of defender of personal freedom can share so much common ground with the tobacco industry.

Tobacco is quite possibly the greatest usurper of individual freedom in the history of the planet. Not only is it among the most addictive substances known to man, it kills half its regular users. What more conclusive denial of freedom is there than your premature death?

Yet the right-wing UK think-tank, the Institute of Economic Affairs (IEA), and its director, Christopher Snowdon, are at one with the industry in their opposition to tobacco control measures – such as high tax and tough regulation – that have been crucial to reducing the number of smokers in Ireland by around 200,000 over the last six years.

Given the public health catastrophe of a near jumbo jet load of smoking-related deaths a month here, it's hard to escape the conclusion that whatever rating the IEA's brand of free market economics puts on the freedom of the individual, it's not as important as the freedom of corporations to make profits.

Of course, they're entitled to their view. But to conceal such dodgy doctrine behind the smokescreen of a meeting in Dublin last week, titled 'How to Really Stop People Smoking', is the height of cynicism.

Indeed, for those who are reducing smoking rates here without the help of any UK libertarian think-tanks, the IEA's sudden interest raised more questions than it answered. For starters, why would an organisation that has no stake in Ireland and has shown no apparent interest in our health throughout its 58-year existence now want to help us cut our smoking rates?

It's also noteworthy that Mr Snowdon's Irish Independent article preceding last week's meeting offers no solutions for people wanting to quit, but instead attempts to undermine successful actions by the State to cut smoking rates and save lives. If Mr Snowdon and the IEA want to assert the primacy of free markets over public health, they should come out and say that, because the notion that they know how to stop people in Ireland smoking or, care if they do, is ludicrous.

They should also get their facts right. In his article, Mr Snowdon makes selective use of statistics to advance the claim that tobacco control measures have failed and have fuelled a smuggling epidemic. All credible evidence shows this is wrong.

He says our smoking rate has remained at 29pc for years despite strict regulation. But the only robust data compiled in Ireland, by Ipsos MRBI for the HSE's National Tobacco Control Office (NTCO), shows our smoking rate is falling steadily and now stands at 22pc – a reduction of around 200,000 smokers since the Government's 2007 Slan survey. Ipsos MRBI said this week its research showed the pivotal role of budgetary policy in the rate reduction. The biggest annual fall came after a 50 cent tax hike on cigarettes in the 2009 Budget.

Mr Snowden also claims that because of smuggling, further tax increases will lead to reduced tax take. This doesn't tally with Revenue estimates given to TDs by Finance Minister Michael Noonan this month showing a €1 increase would yield €148.8m in extra tax.

Thirdly, he grossly overestimates Ireland's tobacco black market. Revenue and NTCO research shows our smuggling rate actually fell from 15pc to 13pc in 2012. It's still higher than the EU average, so we do have a problem. But we're losing €240m a year, not the €586m he claims.

Ipsos MRBI, which also compiles this annual research, says the rate has held steady since first benchmarked four years ago and the big 2009 Budget tax hike had no impact on the illicit market. Mr Noonan also confirmed this week that Revenue considers this survey to be the most reliable because of its methodologies.

Sadly, only the tobacco industry can gain from misguided assertions about our smoking rate and the impact of tax hikes on smuggling. Each year for the last decade they have lobbied against tax increases and then jacked up prices to cover losses from falling numbers of smokers. In this time, the industry has increased prices at a higher rate than tax hikes.

Additionally, of all the smuggled tobacco coming into Ireland, just a fraction is counterfeit, whilst 87pc is the product of the official tobacco industry. Just this month the UK's Public Accounts Committee said tobacco companies are fuelling the black market by deliberately over-supplying their products to European countries. In one well-known case, Andorra was supplied with 3.1 billion packets of cigarettes in a single year – equivalent to every Andorran smoking seven packets daily.

Perhaps the IEA would be better employed looking into Big Tobacco's role in fuelling our black market than attacking Irish public health measures which, through the regulatory approach they despise, are saving countless people from premature death.

Chris Macey is head of advocacy with the Irish Heart Foundation.