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The Artful Dodger Made Me Do It

by EricC Sun Jan 28th, 2007 at 08:16:27 PM EST

From reading Drew Jones' recent diary, "Thank You For Smoking", it is amazing to me that any nation's government would have the audacity to tax a product 600-700%, allow its citizens to buy the product, then congratulate itself that all the tax money that it was collecting was really making its citzens healthier.

Hell of a taxation argument.It would take H.L. Mencken,Willie Sutton, and Groucho Marx to sort it all out. Baroness Thatcher and John Major are undoubtedly chuckling up their sleeves at putting another regressive tax forward, while Trots Tony has probably convinced himself that he has saved the proletarian vanguard of New Labor from a fate worse than taxation.

Most Americans looking at such a taxation scheme would not quite know what to make of it. My father, a jurist and lawyer long deceased, once said (paraphrasing) that legislation attempting to regulate, criminalize, or prohibit normal human desires and appetites was a losing proposition. He was reflecting on the Prohibition experiment in the U.S.

Most Americans today, fortunately, are very cynical of govermnent motives, and almost reflexively oppose new or additional taxation. We also have a well-developed history of ignoring unpopular laws/taxation.

The tactics for ameliorating the effects of excessive or prohibitory taxation were old when Ninevah, Ur, and Babylon were young. They perhaps antedate the philosoper's discovery of the world's oldest profession by a few years. And they work well.

The United States was founded in a revolt against British taxation, and many of the New England fortunes of the pre-Revolutionary period had been built primarily on running untaxed rum into the region past the British tax men.There is a book out on the subject simply titled Rum.

Then in 1794, came the Whiskey Rebellion. The Wiki article on the whiskey rebellion is a bit better, as it points out that one of the reasons that the revolt had such depth was that it was impossible with the roads of the time to get ear corn(a very bulky product) to market other than by distilling it.

The subject, however, is cigarettes.

I will present a map of the States here, and simply note that there is a considerable amount of interstate bootlegging, smuggling, and arbitrage occurring.

I'm sure that the George Morans, Meyer Lanskys, and John Merriweathers in the room can sort out the transportation/distribution and aribtrage potential here.

Next week, I'll try to explore the potentialities inherent in a pack of Marlboros selling for $10.58 a pack in UK.

There already is a considerable amount of smuggling from low tobacco tax countries like Belgium and Holland. Somebody once guess-timated that perhaps 50% of hand rolling tobacco smoked in the South East was smuggled.

A similar thing happens with alcohol. It's one reason why I chimed in on the idea of a degree of harmonisation on tax across europe.

The fact is though that high tax on comusmer products is a very good model for moderating behaviour. Whne other illegal drugs are finally made legal, high taxes on them will inevitably result. Ours in not a libertarian society, we have armies, police force, tax authorities. In return we expect govt to do jobs that are best done at the largest organisational body possible. Every society has this trade-off.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Jan 30th, 2007 at 08:27:03 AM EST

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