PARIS - American writer Charles Hanson Towne wrote that the American prohibition of alcohol of the 1920s was probably one of the strictest prohibition experiences ever in the Western world, “came upon us like a phantom, swiftly..." Well, the ghost is back to haunt us again, if you are to believe a report handed over by French Member of Parliament Yves Bur to the Health Minister.
Under the impetus of the World Health Organization and its Framework Convention on Tobacco Control, countries across the globe have committed themselves to “denormalize” tobacco use and to punish the tobacco industry. On top of taxes getting higher and higher, a whole battery of regulations is also being implemented. But since the demand for tobacco “refuses” to disappear, prohibition is increasingly being brought forward as the only solution.
In Finland, the goal is to have a “smoke-free” country by 2040, and in Iceland, the idea is to sell tobacco over the counter in pharmacies and to make cigarettes available by prescription only in a few years.
In Asia, the kingdom of Bhutan even took a step further, banning the sale of tobacco altogether in 2004.
Yves Bur’s proposal would lead France on the same path. It includes additional price hikes, a new tax for tobacco companies, but also the introduction of neutral packaging, like in Australia, and the obligation to sell tobacco from under the counter – amongst other measures. Although the ambition is not to make France “smoke-free” yet, like Finland, the consequences of the new policy would be the same. Because whether you have a de jure prohibition like in Bhutan or a de facto one through a policy of “denormalizing” smoking, such policies overlook economic principles and actually make the situation worse.
To ban or not to ban
These policies will not change the reasons why tobacco is in such high demand. Experience – whether in Bhutan or in the United States regarding alcohol – confirms that prohibitive policies do not make the banned product go away.
Neo-prohibitionists tend to ignore the fact that as long as demand exists, there will be opportunities for making profit. “Outlawing” tobacco is paving the way for contraband, which fill in to satisfy demand. No wonder in Bhutan, as a report shows, “because of the ban, the tobacco contraband market is heavily implanted”.
This contraband market is very dynamic and well organized around the world. It represents an estimated 11% of the global market, boosted by high taxation, which represents as much as 80% of the price of a cigarette packet in France. Contraband will be here to substitute legal offer, if prohibitive government measures end up banning the legal sale of tobacco.
And yet, on an illegal market, consumers face a lack of information. Most of the fake cigarettes are low-quality products, sometimes stronger and more dangerous for health. For instance, it has been shown that illegally produced, counterfeit cigarettes have levels of cadmium and lead – heavy metals that are dangerous for the health – from 6.5 to 13.8 times higher than the original brand cigarettes.
Moreover, neo-prohibitionist policies would inevitably worsen the dire state of public finances. On top of deleting fiscal revenue of the legal market (about 13.2 billion euro, and that’s not counting related taxes such business taxes), the measures generate news costs to fight counterfeiters. The general population also risks suffering from a rise in organized crime, violence and corruption.
The existence of a legal tobacco supply is therefore paradoxically the only defense against the side effects of prohibition. Authorities should not forget that in their attempts to end tobacco consumption.
Read the original article on Les Echos
Photo – Juan Pablo Colasso
