Obviously the USA is not the only country currently faced with a severe smuggled cigarettes problem at the moment. However, another example that we will discuss here, which is Ireland, only serves to once more validate the argument that the soaring in contraband cigarettes is directly associated with the high taxes and high prices charged when one wants to buy a legal pack of cigarettes. In fact, currently Ireland has the highest tobacco prices in the entire Eurozone, with 80% of the cost of every packet of cigarettes sold actually ending up in state coffers as tax.
According to Irish customs officers during 2014 they have witnessed major increases in illegal tobacco seizures, since they confiscated 53m contraband cigarettes and 9,836kg of roll-your-own tobacco worth, both worth nearly €30m. The 2013 figures were 40.8m of cigarettes and 4,203kg of roll-your-own tobacco, which is indicative of the great increase that has occurred in just a year.
Indeed, things in Ireland were exacerbated last October, when the Finance Minister of the country decided to impose an additional tax of 40 cents per packet of 20 cigarettes, despite repeated warnings, especially from the tobacco industry, that a further increase on cigarettes tax would lead to more smuggling.
The biggest tobacco seller in Ireland is the Japanese Tobacco International (JTI) which owns and markets popular brands such as Benson & Hedges, Silk Cut and Camel. Interestingly enough, JTI maintains that the sudden and very steep hikes in the tobacco taxation push consumers to seek and choose to buy cheaper tobacco products, even if these are illegal and the company points to the fact that according to its own estimates 25% of all cigarettes consumed in Ireland are illegal and avoid paying tax, resulting into a loss of revenue of more than €240m annually for the government. Moreover, it is pointed out that the loss is even worse for retailers, who lose more than €450m due to illegal cigarette trade.
In addition, the general manager of JTI Igor Dzaja highlights the fact that the high cost of legitimate products in Ireland “has created an environment where organised crime gangs can generate huge profits at little risk,” and this is why every time the tax on cigarettes is raised this makes cigarette smugglers very happy. Law enforcement sources also maintain that the involvement of major organised crime gangs and subversives in tobacco smuggling increases due to the vast potential profits in addition to the lenient penalties, especially when compared to those imposed for importing drugs.
The JTI official also drew attention to the fact that 60% of all the cigarettes confiscated by customs in Ireland in 2013 can be termed as “illegal whites,” which are cigarettes that are in fact manufactured by small local tobacco companies legitimately operating in their own countries, but which have absolutely no connection to any of the tobacco companies that legally supply tobacco products in Ireland. Examples of brands that are commonly seized as illegal white products include the D&B and Gold Classic brands.
What makes the Irish market even more lucrative for smugglers is the fact that some of them can acquire a legitimate pack of Marlboro for as little as €1 in countries such as Belarus, Kazakhstan and Moldova, thus significantly raising their profit margin when they sell these in the Irish market. Moreover and even more alarming is the belief that smugglers are also getting cigarettes manufactured even cheaper in China, but these are of far inferior quantity and could contain extremely dangerous impurities that render them extremely hazardous for the health of unsuspecting smokers who resort to buying smuggled cigarettes not because they want to break the law but simply because they cannot possibly afford the excessive retail price of a legal pack.