Cigarette Stash

How sky-high British taxes have spawned a black market in tobacco.

(Page 2 of 2)

No. They'll go further.

Smugglers bringing an illicit load from Eastern Europe, for instance, utilized a set of hydraulics to hide cigarettes between the body panels of a truck. When officials figured out the trick, they flipped the switch to watch the outer shell of the vehicle rise five feet and display its freight of forbidden fags.

"It was like something from a James Bond film," said Customs spokesman Nigel Knott. The price tag was sexier still -- £1 million for the single load.

The problem for Britain -- and other tax-happy governments -- is that as long as profits outweigh punishment, smugglers will figure out ways around the new controls. The Brits of all people should know better. Not only did their upstart American colonies declare their independence 226 years ago, partly over such issues. That was also the year that Adam Smith published The Wealth of Nations, which included this pearl of wisdom: "Not many people are scrupulous about smuggling when... they can find any easy and safe opportunity of doing so." "Easy" and "safe" are just questions of risk aversion, and with substantial payoffs people are willing to incur loads of risk.

It seems as if the Brits have yet to learn that when taxes become too high, people don't submit -- they smuggle.

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