Where There's Smoke

The other day I was writing about the problem with [*ending the supply of drugs*](https://peakd.com/hive-126152/@tarazkp/an-end-to-the-supply) into the US, because the demand remains. And as a little bit of evidence of this, is the policies from Australia around cigarettes, where the price has 10x'd in the last twenty years. But rather than ending people smoking, it created a black market for cigarettes. ---  ---  > So there are headlines like that. But the problem is, that while the headline could be technically true in some way as they are saying that due to the cigarette black market the government is missing out on 6.7 billion in tax revenue, that isn't necessarily the case, is it? Because what it also means is that some Australians are paying less for their cigarettes by buying them illegally, but the people who are doing so are also likely to be the ones who will spend the money on other goods and services, in Australia. This is an old list in USD amounts, but you can see that Australia is way ahead for the cost of a packet of cigarettes.  > It is now around $45 USD for a pack. So the people who are still smoking in Australia, still addicted, are spending a huge amount of money to stay smoking, whether legal or illegal. But that headline points to something else interesting, because while the Australian government says that they want people to stop smoking, rather than banning cigarettes (which would amount to a black market anyway), they are really only concerned with the *tax* they are missing on it, so are now "cracking down" on "illicit tobacco" sales. Yet, all those companies who are syphoning tens of billions out from Australia by using *legal* loopholes so they don't have to pay their taxes... well, nothing can be done about that. If they instead closed those loopholes though, the black market for cigs would be a tiny drop and they could afford to help anyone who wanted to actually break their addiction, *for free.* There is a massive disparity between the way normal people are treated when it comes to tax, and the corporations. Not only are the punishments more severe, but the citizen gets harmed multiple times more when a corporation funnels the money out. Not only will the money not be spent in Australia (for this example), but the shortfall in taxes will mean that the government will take more debt for taxpayers to service, and raise taxes to cover the debts and recoup what heads overseas. And of course, the average Australian has to pay their taxes automatically and in full *in Australia* before they get their pay check, at a much higher rate than the corporations, who use their creative accounting methods to pay fractions on the dollar. If the Australia government really wanted to improve the tax situation, they wouldn't spend resources going after illegal cigarettes directly, they would spend their time ensuring that the corporations have no loopholes to use. Especially the service ones that hire next to no one in Australia, but take out billions in profit. If those same companies pull out of Australia instead of paying the tax, all the better, because it opens up possibilities for local companies who will use local people to work. > Every country should be closing those tax doors for foreign companies. But as said, outside of the tax discussion, this is evidence that "stopping the supply" doesn't work if there is still the demand, it just makes the supply chain illegal and therefore, more valuable due to risk and reward models. And in the case of Australia, there is now a lot of crime around "tobacco wars" that didn't exist when the price was lower, because the reward wasn't worth the risk. The rising prices into the echelons of ridiculousness is meant to price people out of the market, which is another way to strangle supply, but it has just led to crime and violence that didn't exist earlier around this product. > Supply and Demand. The governments are creating criminals of ordinary people doing very little harm, while letting those who are doing great harm to everyone, are rewarded for their efforts. Taraz [ Gen1: Hive ] --- **Be part of the Hive discussion.** - Comment on the topics of the article, and add your perspectives and experiences. - Read and discuss with others who comment and build your personal network - Engage well with me and others and put in effort **And you may be rewarded.** ---