Australia turned tobacco into a luxury product and, with this, gave rise to the opening of the black market, illicit and uncontrolled. The average price of a pack is around 55 Australian dollars, approximately 33 euros, and the very dynamics of the tax increases have ended up fueling a parallel economy that, according to the estimate cited in an article published by the The New York Timescan explain up to half of tobacco sales in the country.
The American newspaper’s chronicle describes an already routine ecosystem: buying “under the counter” in stores, sellers who go to parking lots and networks that have found a highly profitable business. In that sense, a retiree interviewed by the Times, Pat Felvusexplains the incentive with a phrase that sounds like common sense: “Why would you pay four times more?”
The exponential increase in the price of tobacco leads to violence. This is so, since the competition for the control of illicit tobacco has resulted in arson, extortion, shootings and homicides. The Australian police have spoken of at least 100 arson attacks linked to this market war, concentrated in Melbourne, and the report itself includes direct threats to merchants. As criminologist James Martin explains, cited by the Times, “before it was just a health problem and now it is a crime problem.”
Europe follows the same steps
What happens in Australia is uncomfortable for Europe. If we look at Belgium, we can see how it has become the nerve center for the production and distribution of counterfeit cigarettes in Europe, a multi-million dollar criminal business that takes advantage of the country’s strategic location and excellent road network. Due to high taxes on tobacco in neighboring countries such as France and the United Kingdom, criminal organizations set up clandestine factories in Belgian warehouses, often operated by undocumented workers, to supply the black market with cheap but dangerous products for health.
The New York Times article teaches us that we should not give up health policy by raising prices, but rather refine it. That is to say, when the legal price becomes unaffordable and the legal alternatives become narrower, illegal purchases cease to be marginal and become normalized, even in profiles with no prior relationship with crime. Australia has shown it: with a tax designed to reduce consumption, it has ended up creating a second crisis, security, health control and organized crime.