Time to bin Plain Packaging once and for all

November 25, 2014 4:50 PM

A new study from two Australian scientists suggests that the plain packaging of cigarettes, which has been mandatory down under since 2012, has made no difference to the total consumption of cigarettes since it has been introduced. Despite the “econometric efforts” of the researchers, “the data refused to yield any indication that this policy has been successful; there is no empirical evidence to support the notion that the plain packing policy has resulted in lower household expenditure on tobacco than there otherwise would have been.”

Plain packaging is of course in the headlines here, too, with calls for it to be introduced in the UK. The evidence suggests it wouldn’t, as critics claim, reduce the level of smoking. Proponents would suggest, with some legitimacy, that plain packaging is worth doing anyway – it might not do any good, but it can’t do any harm, right?

Wrong. Plain Packaging is a smuggler’s charter. We tax tobacco so highly that the price of cigarettes is extraordinary. As a result, more and more cigarettes are brought from abroad or – more worryingly – counterfeited. 

There is not a smoker alive who has been stood in Dubai Airport or at Calais who hasn’t bought a few extra packets to enjoy at home. A town just across the Belgian border, Adinkerke, has become “something akin to a tobacco theme park” for Brits on a tobacco run. In a wonderful article, The Times suggests that most British visitors are in Adinkerke for 45 minutes – saving £400 per trip if they stick to the recommended customs allowance.

One visitor, Joyce Clark, made her motivations clear. “The savings are colossal. There a lot of English here but the government has made cigarettes so expensive that, with this price difference, people are bound to be tempted.”

Quite. Last year, HM Treasury estimates it missed out on £1.1 billion worth of taxes from tobacco thanks to illegal smuggling. This is a huge figure. And here’s the rub – it will most likely go up if plain packaging is introduced. Plain packaging will make smuggled packs from abroad more difficult to spot, as cigarettes brought abroad will be repackaged by professional smugglers into generic packaging. Counterfeit cigarettes, professing to be any number of well-known brands, can be put into the same plain packaging despite the fact that only the manufacturers know what sort of additional nasties lurk in the stick. Some 9% of the tobacco smoked last year had no interaction whatsoever with the Chancellor. That’s an extraordinarily large black market and one that we must crack down on, not encourage.

High taxes don’t just, then, hurt those who buy cigarettes. The Treasury loses cash that, with a £1.4 trillion credit card bill, it can scarcely do without. It’s a similar story for alcohol duty. Making a pint so expensive in the local pub through beer duty and assorted other taxes have seen thirsty punters flocking to chains that can offer a cheaper pint thanks to economies of scale, has seen landlords squeezed for every penny buying cheaper bottles of beer brought over from Calais in the back of a van, and has resulted in many pubs going out of business – with the associated job and tax revenue losses – as punters have retreated to the comforts of home with a cheap six-pack from the supermarket. There's of course nothing wrong with buying beer at the supermarket but when that decision is made because of government regulations and taxes, it's a different story.

Well-meaning activists last week called for a regressive “sugar tax” that has been shown by international evidence to do very little other than push up the cost of food to those who can least afford to spend more on the weekly shop. Sin taxes rarely work, fall disproportionately on the poorest, and create obvious incentives to find ways around the taxman.

In short, on the ledger of public policy impacts, plain packaging appears to do nothing to discourage smoking and will make it easier for unscrupulous black marketeers to game the system for their own benefit. It’s bad policy. It’s time to drop it – once and for all.

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