Ireland, cigarette smuggling and the law of unintended consequences Paul Cullen, Consumer Affairs Correspondent, The Irish...
The fag end of Europe… (map of Ireland, with Europe)
The land of saints and scholars…
And drinkers and smokers…
March 29, 2004   Ireland becomes the first country in the world to outlaw smoking in all pubs, restaurants and closed publ...
Consigned to history
So what happened then? <ul><li>huge public support/compliance </li></ul><ul><li>smoking rates fall </li></ul>
So what happened then?  Smoking rates fall 32.2%
So what happened then? <ul><li>huge public support/compliance </li></ul><ul><li>smoking rates fall </li></ul><ul><li>decli...
So what happened then? Prices go up € 6.25 € 8.40
But what else happened? <ul><li>visibility of smoking increases </li></ul>
But what else happened? Massive price disparity € 8.40 € 5.60 € 3.60 € 2.35 € 1.13 € 0.74 € 4.50
But what else happened? <ul><li>visibility of smoking increases </li></ul><ul><li>massive price disparity with other count...
Black markets, white sticks and the lure of the North <ul><li>duty-free </li></ul><ul><li>Northern Ireland (52 million cig...
Black markets, white sticks and the lure of the North <ul><li>duty-free </li></ul><ul><li>Northern Ireland (52 million cig...
The rise of the black market <ul><li>increase in seizures </li></ul>
The rise of the black market <ul><li>rise in seizures  </li></ul><ul><li>huge individual seizures </li></ul>
The rise of the black market <ul><li>rise in seizures  </li></ul><ul><li>huge individual seizures  </li></ul><ul><li>compl...
Ireland is now a world leader in tobacco smuggling <ul><li>about 25 per cent of cigarettes are illegal </li></ul><ul><li>t...
Where are smuggled cigarettes sold? <ul><li>street markets </li></ul><ul><li>white vans </li></ul><ul><li>door to door </l...
Why is this happening? <ul><li>hard times </li></ul><ul><li>low penalties </li></ul><ul><ul><li>163 convictions in 2009 </...
The consequences <ul><li>loss of revenue for the Exchequer </li></ul><ul><li>rising smoking rates </li></ul><ul><li>“ hone...
What has been done? <ul><li>stiffer penalties </li></ul><ul><li>no duty increase in 2009  </li></ul>
What has been done? I have decided not to make any changes to excise on tobacco in this Budget because I believe the high ...
What has been done? <ul><li>stiffer penalties </li></ul><ul><li>no duty increase in 2009  </li></ul><ul><li>crackdown on s...
Ireland, cigarette smuggling and the law of unintended consequences Paul Cullen, Consumer Affairs Correspondent, The Irish...
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Ireland, cigarette smuggling and the law of unintended consequences - Paul Cullen, Consumer Affairs Correspondent, The Irish Times

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Ireland, cigarette smuggling and the law of unintended consequences - Paul Cullen, Consumer Affairs Correspondent, The Irish Times

  1. 1. Ireland, cigarette smuggling and the law of unintended consequences Paul Cullen, Consumer Affairs Correspondent, The Irish Times September 9, 2010
  2. 2. The fag end of Europe… (map of Ireland, with Europe)
  3. 3. The land of saints and scholars…
  4. 4. And drinkers and smokers…
  5. 5. March 29, 2004 Ireland becomes the first country in the world to outlaw smoking in all pubs, restaurants and closed public spaces
  6. 6. Consigned to history
  7. 7. So what happened then? <ul><li>huge public support/compliance </li></ul><ul><li>smoking rates fall </li></ul>
  8. 8. So what happened then? Smoking rates fall 32.2%
  9. 9. So what happened then? <ul><li>huge public support/compliance </li></ul><ul><li>smoking rates fall </li></ul><ul><li>decline in pub trade – 500 closures a year </li></ul><ul><li>prices go up </li></ul>
  10. 10. So what happened then? Prices go up € 6.25 € 8.40
  11. 11. But what else happened? <ul><li>visibility of smoking increases </li></ul>
  12. 12. But what else happened? Massive price disparity € 8.40 € 5.60 € 3.60 € 2.35 € 1.13 € 0.74 € 4.50
  13. 13. But what else happened? <ul><li>visibility of smoking increases </li></ul><ul><li>massive price disparity with other countries </li></ul><ul><li>tax take: €6.71 (out of retail price of €8.40) </li></ul><ul><li>mass switching to the unregulated market </li></ul><ul><li>fresh growth in popularity of smoking </li></ul>Year Smoking rate 2008 29.5% 2009 29.5% 2010 31%
  14. 14. Black markets, white sticks and the lure of the North <ul><li>duty-free </li></ul><ul><li>Northern Ireland (52 million cigarettes in 2009) </li></ul><ul><li>cheap flight destinations </li></ul>
  15. 15. Black markets, white sticks and the lure of the North <ul><li>duty-free </li></ul><ul><li>Northern Ireland (52 million cigarettes in 2009) </li></ul><ul><li>cheap flight destinations </li></ul><ul><li>the internet </li></ul><ul><li>criminal suppliers </li></ul>
  16. 16. The rise of the black market <ul><li>increase in seizures </li></ul>
  17. 17. The rise of the black market <ul><li>rise in seizures </li></ul><ul><li>huge individual seizures </li></ul>
  18. 18. The rise of the black market <ul><li>rise in seizures </li></ul><ul><li>huge individual seizures </li></ul><ul><li>complex importation routes </li></ul><ul><li>involvement of organised crime/paramilitaries: from armed struggle to cigarette smuggle </li></ul><ul><li>characteristics of drug-dealing </li></ul><ul><li>smuggling of Ireland-specific brands </li></ul>
  19. 19. Ireland is now a world leader in tobacco smuggling <ul><li>about 25 per cent of cigarettes are illegal </li></ul><ul><li>this compares to 6 per cent in Norway, 3 per cent in France, 2 per cent in Spain and 1 per cent in New Zealand </li></ul><ul><li>proportion of counterfeit cigarettes up from 50 per cent to 80 per cent in two years </li></ul>
  20. 20. Where are smuggled cigarettes sold? <ul><li>street markets </li></ul><ul><li>white vans </li></ul><ul><li>door to door </li></ul><ul><li>concerts, festivals, sporting events </li></ul><ul><li>by phone </li></ul><ul><li>on the internet </li></ul>
  21. 21. Why is this happening? <ul><li>hard times </li></ul><ul><li>low penalties </li></ul><ul><ul><li>163 convictions in 2009 </li></ul></ul><ul><ul><li>33 jail sentences </li></ul></ul><ul><ul><li>only 14 served time </li></ul></ul><ul><ul><li>largest fine €3,500 (2009) </li></ul></ul><ul><ul><li>smallest fine €20 </li></ul></ul><ul><li>weak enforcement </li></ul><ul><li>widespread ambivalence </li></ul><ul><li>high cigarette prices </li></ul>
  22. 22. The consequences <ul><li>loss of revenue for the Exchequer </li></ul><ul><li>rising smoking rates </li></ul><ul><li>“ honest” retailers suffering </li></ul><ul><li>cross-Border trade </li></ul><ul><li>decline of Irish tobacco manufacturing </li></ul>
  23. 23. What has been done? <ul><li>stiffer penalties </li></ul><ul><li>no duty increase in 2009 </li></ul>
  24. 24. What has been done? I have decided not to make any changes to excise on tobacco in this Budget because I believe the high price is now giving rise to massive cigarette smuggling. My responsibility as Minister for Finance is to protect the tax base. Minister for Finance, Brian Lenihan
  25. 25. What has been done? <ul><li>stiffer penalties </li></ul><ul><li>no duty increase in 2009 </li></ul><ul><li>crackdown on smuggling </li></ul><ul><li>new tax stamp </li></ul><ul><li>new equipment </li></ul><ul><li>confidential smuggling phone-line </li></ul>
  26. 26. Ireland, cigarette smuggling and the law of unintended consequences Paul Cullen, Consumer Affairs Correspondent, The Irish Times September 9, 2010

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