In February 1999, British Chancellor Gordon Brown announced a plan to stem the flow of smuggled cigarettes into Great Britain. Chancellor Brown's plan is intended in part to ensure that the British government receives revenue from the current tobacco tax instead of losing it to smugglers. Last year, the British government lost L1.5 billion as a result of illegal sales of tobacco products.
In February 1999, British Chancellor Gordon Brown announced a plan to stem the flow of smuggled cigarettes into Great Britain. The plan calls for the appointment of an anti-smuggling czar (former Barclays chief executive Martin Taylor), the installation of X-ray machines at ports, and an increase in the number of customs officials assigned to regulate cigarette smuggling. Furthermore, every pack of cigarettes entering Britain may soon be stamped to mark the country of origin to help track smuggling.
Chancellor Brown's proposal is intended in part to ensure that the British government receives revenue from the current tobacco tax instead of losing it to smugglers. Last year the British government lost L (English pound) 1.5 billion as a result of illegal sales of tobacco products. Although exact figures are elusive, some predict that 20 percent of the cigarettes smoked in Britain have been smuggled in. Cigarette manufacturers point to Britain's excise tax on tobacco, the highest in Europe, as the cause for increases in smuggling operations. One recent tax increase raised the price of a pack of 20 cigarettes by nearly 80 percent, giving the United Kingdom the highest retail price (L (English pound) .88) and total tax (L (English pound) 308) of any EU country on a pack of cigarettes. In comparison, as of July 1999, the three closest prices on the continent-from France, Belgium, and the Netherlands-were L (English pound) 1.98, L (English pound) 1.78, and L (English pound) 1.58 respectively. Nevertheless, the Chancellor is quick to defend the tax policy as one "formulated for good health reasons."
With taxes so high relative to other nations, smugglers have discovered an opportunity for quick and easy profits. Treasury and customs officials say that many criminals have likely switched from dealing hard drugs to tobacco because of the high profit margin and lighter penalties: smugglers who are caught bearing tobacco receive a maximum of nine years in jail, while hard-drug smugglers receive a life sentence.
Officials are becoming increasingly frustrated as the profits of smugglers become more visible. For example, in Kent, a major port of entry for smuggled goods, numerous suspected criminals now live in large new houses, drive luxury off-road vehicles, and sport Rolex watches. Detective inspector Allan Atherfold remarked, "We are not winning the war-it is a thriving business. Whatever we can confiscate is just seen as an inconvenience or a business overhead to the criminal involved." The "thriving business" of cigarette smuggling has spawned a complex bureaucracy and an international criminal racket. Investigators have found that organized crime from both Italy and Russia is becoming involved in the operation. A recent survey revealed that 40 percent of all retailers have been approached by smugglers. British customs officials have even found smuggled cigarettes for sale in unlikely outlets such as pet shops, carpet stores, and ice-cream vans,
Easily accessible cigarettes have also opened up the market to underage smokers. Government statistics show that the amount of underage smoking has increased 70 percent in the past ten years. …