Friday, February 03, 2023

Free trade 72, Illicit products and prohibitions in government

Public finance and health. 

This brand is 40/pack retail, obviously illicit. Saw this in Bugallon, Pangasinan the other day, some tricycle drivers puffing and the packaging has no graphic health warning, soI asked them.

Excise tax alone in 2023 is P60/pack (P55 in 2022, P63 in 2024). So the cheapest legal cigarettes should be around P95/pack, maybe P25 for the manufacturers, P10 for retailers/tindahan and DOF gets P60.

For this P40/pack brand, maybe P20 to manufacturers/smugglers, P10 for retailers, P10 for government protectors (police, LGUs, etc), DOF gets zero.

And since it's very cheap, there will be more smoking, not less. So the health NGOs and activists, DOH, WHO, other anti smoking groups and doctors are deluding themselves that as tobacco taxes rise, smoking incidence declines. For legal tobacco yes, but for illegal smuggled tobacco, no. Lots of puffing and smoking happening. And criminal smugglers and their government protectors are laughing their way to the banks.

"Strict enforcement" vs smuggling and illicit products is never done because some or many government enforcers and LGUs themselves benefit from more smuggling. If they enforce the law, they get zero for themselves, get only their  salaries bonuses. If they allow smuggling, they get extra say P10/pack and still get their salaries bonuses.

If you're corrupt in government, you don't have to steal like project overpricing or have many ghost employees. You just declare many prohibitions. Bawal drugs, bawal prostitution, bawal jueteng gambling, bawal smuggling, etc. Then you allow them all, in exchange for big money, quick money.

See also:
Free trade 69, US-UK FTA, August 25, 2019
Free Trade 70, Free trade should be separate from war, July 05, 2022 
Free Trade 71, Anti-Illicit Trade Conf in Manila, invstment liberalization in agri, September 09, 2022.

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