The customs authority in Dijon announced a large scale seizure of smuggled tobacco this week. The tobacco had been brought in from Germany, where prices are lower. Dijon customs said that the gradual rise in the price of tobacco in France, which started this month and is expected to result in a €10 pack of cigarettes by 2020, makes smuggling from some neighbouring countries more attractive. French customs seized 238 tonnes of contraband tobacco in 2017.
This latest seizure in Dijon highlights once again the unintended consequences of poor tax policy. The customs authorities recognise a truth that policymakers ignore: increasing the price of all tobacco will inevitably lead to an increase in tobacco smuggling and illegal trade. This is why maintaining a price differential between cigarettes and fine-cut tobacco is so important. Fine-cut tobacco can act as a ‘buffer’ between high-priced legal cigarettes and cheaper illegal products. By not respecting this basic tenet of smart tax policy, the French government is driving the activity witnessed in Dijon.
Speaking on the seizure, ESTA Secretary General Peter van der Mark said: “It seems there is no end in sight to the deluge of evidence showcasing the failure of France’s tobacco policy. Ignorant taxation is driving criminality at all ends of the tobacco supply chain. We see in Dijon the customs authorities appealing the other branches of government to support them by implementing sensible policies which do not encourage smuggling. You have to wonder, how much illegal activity must there be before the French politically correct establishment admits the truth and takes action to prevent illegal tobacco trade?”
