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Our View: Higher tax on tobacco won’t discourage smokers

ANOTHER seizure of illegal cigarettes yesterday, while not as big as the 10 million confiscated in April, appears to be part of a growing trend over the past couple of years as prices rise.

The previous government hiked cigarette prices as a means to boost state revenues based on the existing number of smokers at the time. But now, Cyprus looks set to go down the path of other countries, including the US and EU member states, in losing revenue and in having to increase resources to battle criminal gangs that clearly now have a foothold in a black market that was an isolated problem a few years ago.

Last month, a report revealed that the EU had lost €11.5bn in taxes on tobacco products in 2014, so their policy of taxing smokers into oblivion has backfired. Statistics in the US show that for every 10 per cent hike in the price of cigarettes, only four per cent of smokers will give up because of that. The remainder will try to find cheaper sources.

For instance, according to the EU’s Green Line Regulation report on Cyprus for 2014, during the year authorities confiscated 140,029 cigarettes and 370,794 grammes of hand rolling tobacco. The European Commission said this consisted of small quantities and was due to the price differentials between the north and the south of the island, indicating that these were ordinary people, not smugglers.

This goes to show that far from more people giving up because of price – though some may – anyone who can get their hands on cheaper cigarettes will try that first because if someone is not going to quit based on the constant bombardment with health warnings, price is not going to be an issue until it becomes ridiculous, and even then not necessarily.

In Ireland, where smokers are almost treated like social outcasts and a pack of cigarettes is approaching €10 – about 80 per cent of which goes to the state – the number of smokers still stands at around 29 per cent of the population, the latest Eurostat said. In Cyprus, the number was 31 per cent so not that much difference.

According to reports from Ireland, criminals generate €3m a week from illegal tobacco sales and €240m a year is estimated to be lost to the state.

The WHO estimates that tobacco taxes around the world yield more than $200bn a year to governments, which they greedily grab without any qualms while constantly demonising smoking.

As long as governments, including Cyprus, continue to see taxes from smoking as a cash cow – and keep the activity legal in order to do so – they should not expect smokers to just keep stumping up ad infinitum, or complain about the resulting black market activity, which they indirectly caused. They can’t have it both ways.

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