More and more, they rely on the argument that higher taxes are an incentive for smuggling. They argue that increased taxes will lead to increased smuggling, resulting in less revenue for governments and undermining taxation as an effective health policy to curb tobacco consumption. Two types of smuggling Different tax incentives, price differentials, geographical characteristics and socio-economical conditions may lead to different kinds of illegal activities. It is difficult to precisely define smuggling, because smugglers constantly adapt their activities to get around new regulations and customs controls. Bootlegging Bootlegging is encouraged by substantial differentials in the price of tobacco products between neighbouring countries or between neighbouring states or provinces.
Bootleggers often use especially made vehicles that have been altered to conceal the goods.
An example of bootlegging is the illegal traffic of hand-rolling tobacco between Belgium and the United Kingdom. Bootlegging is in one sense old-fashioned smuggling. It is often organised by gangs, but does not require huge investments. Large price differences are essential in sustaining this illegal business. While bootlegging is a problem in some parts of the world, substantial price differences between countries are relatively uncommon and the amount of bootlegged tobacco is much smaller than that from large-scale smuggling.