Via The Guardian, an astonishing piece of news about the effects of high taxation. In their zeal to protect Australians from their own decision making (and to raise some cash), Australian governments have been steadily raising the tax on cigarettes, which now accounts for an average of A$28 on a pack of cigarettes selling for A$40. (US$1 buys around A$1.54.) That’s about three times the rate from a decade ago. About 21 percent of adults smoked daily in 2005. By 2022 that figure had fallen to 11 percent, in no small part due to the higher taxes. So far, so healthy.
Revenues from cigarette taxes peaked in 2019-20 but have now fallen sharply. A natural consequence of lower smoking rates? Well, partly, but only partly. Amazingly, the extortionate cigarette tax, described by The Guardian as the highest in the developed world, has led to the development of a massive black market, complete with the crime that black markets can foster. In Victoria there has been a wave of fire bombings. It’s now estimated that a fifth of the cigarettes bought in Australia are now black-market smokes.
This, of course, was completely unpredictable.
As was this (via the Financial Times):
Trying to outdo its Conservative predecessor in efforts to tax the wealthy has proved a costly own goal for Britain’s Labour government. A wave of “non-doms” — whose permanent home for tax purposes is outside the UK — are emigrating after Labour made their worldwide assets liable for inheritance tax, with a hit to the economy and jobs.
Astounding!