Smuggling is a serious global problem faced by many industries including alcohol, electronic goods, cars and tobacco. It is caused by high tax levels, different levels of tax on two sides of a border and the imposition of national trade barriers to legal imports. Tobacco products command high values. They are easily transportable, making them an easy target for smugglers. Too many governments follow a policy of raising tobacco taxes to excessive levels and ignore dramatic tax differentials between neighbouring countries.
Smuggling is boosted by every tax-change that improves the profit margin for the smugglers.
The effect of such a policy can clearly be seen here and now in the erosion of the legitimate tobacco market in the UK, due to far higher British taxes than those in mainland Europe. British American Tobacco sells goods through wholesalers and distributors. We invest heavily in building a legitimate business through proper and well-managed distribution networks. In many markets we suffer from smuggling. Our policy therefore is to engage in constructive dialogue and to cooperate with governments to try to eliminate the causes of the smuggling.