The rise in tax is no good news for the economic, social stability of any country. More the tax would mean increased rates of products, bankruptcy of businesses, therefore reduction in wages of average workers, rise in the poverty level and the worse is the increase in the crime rate. Moneyless and helpless individuals take up criminal ways to earn and sustain themselves. Taxation consultants give an account of the appropriate tax to levy upon materials. There is indeed one among many organizations, which is International Tax and Investment Center Tobacco thatsuggest tax systems that benefit industry.
Crime in the name of black marketing is a curse on the growth of economy. It is a market comprised of several illegal activities, which work against the norms of law and government. The black market or underground economy sells products without levied with tax, in unofficial and unauthorized manner. Tobacco as a product is cultivated in innumerable farms of several countries. Therefore, the huge demand of the products made from tobacco, these are cigars, smoking tobacco, chewing tobacco, snuff and other forms of tobacco. It is a big market with big number of producers, manufacturers and consumers. It would not be shocking to know that black market of tobacco products is also huge. According to an estimation, the international black market supplies 11.6% of world’s total consumption of tobacco products and nearly 650 billion cigarettes annually.
Perhaps, one of the chief reasons of growth of black market in tobacco is the increased rate of tax on products including tobacco items. Orders on online market, illegal shipping of the products, or simply the products brought legally from a low tax jurisdiction zone, transported and sold illegally in high tax jurisdiction at considerably low prices while securing the profits.
Smuggling raises some unwelcomed problems. The smugglers disrupts the economy and market of tobacco products of places with high tax jurisdiction, when they sell the items at cheaper rate. This also encourages people to use cheaper products, which are ultimately harmful, also, get easier for kids especially under 18 to buy and consume them. Some research works depict that when smokers reduce the number of cigarettes or get back to “light” cigarettes they tend to inhale more than usual amount of smoke. This is because the body tries to compensate for the nicotine reduction to somehow maintain the blood saturation level. Another problem raised is that the government lose considerably large amount of tax, due tosmuggling of cheaper items.
A satisfying or rather positive factor is that many companies have come up with solutions to tackle these underground activities. The tobacco selling companies are taking measures, educating their dealers and consumers about these malpractices. International Tax and Investment Center Tobacco sponsored by several companies and all the major tobacco corporations is an independent organization that provides government with advices regarding tax on tobacco. This organization also attempts to seize the group of smugglers and thus endeavors to clean the market and push the quality products on the forefront.