Sam’s tax increase has sparked a crime wave

Sam Lotu Iiga was all proud as punch when he beefed up tobacco taxes.

Perhaps he won’t be so pleased as a crime wave sweeps across the nation all because of increased taxes.

Dairy owners are fortifying their businesses as the lucrative black market for tobacco fuels a wave of commercial break-ins.

Burglars have targeted up to 20 cigarette retailers???predominantly dairies and service stations???in about the last fortnight in?Christchurch,?making off with thousands of dollars worth of tobacco products.

Police have launched an investigation?dubbed Operation Smoke?as they try to catch those responsible. They are yet to make any arrests, but have some suspects.

A dairy owner, who did not want to be identified, said thieves smashed through the wooden backdoor of his business in south Christchurch, about 1.30am on September 24.

They used a crowbar to open a locked cabinet inside and stole about $10,000 worth of tobacco products. ?

The dairy owner said he was worried the burglars would return and had struggled to sleep since the incident.

He planned to install steel doors at his business to make it more secure.

“I hope police catch them [the burglars] as soon as possible. They are affecting the whole industry in Christchurch. Everybody is . . .?angry and nervous about it.”

The dairy owner said it was the first time in seven years his business had been targeted by burglars.

“I never imagined someone would break into my shop like this.”

The dairy owner?blamed the recent spate of break-ins on the increasing cost of cigarettes. The Government needed to be mindful of the unintended consequences of tax hikes on tobacco products, he said.

The evidence that was always going to happen is worldwide. The government was warned but they didn’t listen.

When tobacco is more expensive than cannabis you definitely have a problem.

Malaysia increased excise duty on cigarettes by 430% between 2002 and 2010. The increase in the price of legal cigarettes prompted consumers to switch to illicit sources of supply. In 2002, Malaysian smokers consumed 19.5 billion legal cigarettes. By 2010, this had declined 31% to 13.5 billion. The decline in legal sales was mainly driven by the surge in consumption of illicit cigarettes, which reached 8.8 billion in 2010. As a result, the illicit market share rose from 21% in 2002 to 39% in 2010. Acknowledging the massive illicit trade problem

Acknowledging the massive illicit trade problem and the impact of excessive cigarette taxation, the Government decided to freeze excise in its 2012 budget. The Malaysian Prime Minister made the following statement on 8 October 2011, the day after the budget announcement:

?We can?t increase?the price of cigarettes sharply when the use of illegal cigarettes has reached 40%. This level is too high. If there?is a sharp increase in the price of cigarettes, the percentage of those who smoke illegal cigarettes will continue to rise.?

Ireland has also had the same problem:

Ireland experienced two periods of sharp increases in the excise duty paid on cigarettes during 2001?2003 and 2006?2009. The total increase in cigarette excise duty rates from 2000 to 2009 was 76% in the most popular price category ? three times higher than the corresponding rate of in?ation (26.2%).

From 2000?2005, cigarette prices increased by 31% and duty-paid volumes decreased by 16%. During the second period of steep duty excise increases (2006?2009), prices increased by 33%, reaching ?8.45 a pack ? almost ?2 more than the EU country with the highest prices.

By 2012, Government ?gures show that at least 20% of all cigarettes consumed in Ireland were not duty paid and the majority of them (14%) were illicit. The proportion of illicit cigarettes in Dublin in 2011 was estimated at 1 in 3.

The KPMG Project Star (conducted on behalf of Philip Morris International and based on detailed empty pack surveys) 2011 results suggest that the level of non-duty paid cigarettes was higher in Ireland than in any EU country not on the EU?s Eastern border and well above the EU average. Ireland has the second highest cigarette prices in the EU as a result of sustained increases in tobacco excise duty, which has risen by almost 40% in seven years from 2005?2012. The fall of 10.25% in terms of GDP based personal purchasing power between 2007?2010, resulting from the economic downturn in Ireland, is likely to have made illicit tobacco products more attractive to consumers.

This is what happens when clown ministers are captured by officials. Common sense goes out the window and crime increases.

-Fairfax

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