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Monday, April 05, 2004
Tobacco's road to hell

Philip Morris, EU close to $1 billion settlement over cigarette smuggling charges

The makers of Marlboro aren't being charged with doing the actual smuggling.  But they are about to be charged a load of money over something nearly as scuzzy.  They sent additional cigarettes to neighboring countries, knowing they would then be smuggled.

Having harangued Philip Morris, however, let me say this:  the EU brings the smuggling down on its own head.  The cigarettes are being smuggled from countries with 10% excise taxes to countries with 200%+ excise taxes.  It doesn't take an Adam Smith to figure out that someone's going to try to figure out a way to make a profit off of the difference.

Heck, even in the U.S., with differences between various state excise taxes and Native American reservation excise taxes, smuggling does on.  And the difference isn't usually 200%.

So, the socialist EU governments try to make heavy coin off of tobacco, and end up paying $1 billion per year trying to stop the smuggling, and new criminals, they themselves create.

Remember that taxes are essentially a use of governmental force.  When a government heavily taxes anything, it means they want less of it in their society and are willing to send out their agents, both tax and police, to stop it.  In socialist governments, they want less tobacco.  They also heavily tax gas, which means they want less gasoline used.  Finally, they heavily tax high incomes.  This means they want less success in their society.  That's right.  They'd like to see everyone at home, not smoking, and having roughly the same income as their neighbor, regardless of how hard they work or how good their ideas are.

Be very careful when you cheer high taxes, even if it's of something you despise.  My dad's an asthmatic, and I saw growing up in the '70s what widespread public smoking did to him.  I bear no love of the tobacco industry.  But I'm very leery of the high taxes levied on them.

And, by the way, I see the big multi-state settlement as a way for the tobacco companies to ensure that the states don't allow anyone to drive them out of business.  The lawyers and governments made things so bad, they saw a multi-decade, multi-multi-billion-dollar settlement as the cost of doing business.

It's scary to anyone with a love of the small-government vision this country was founded and prospered on.  Let's be careful out there, people.

Posted at 11:16 am by brandonstarr


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