500 robberies incentivised by government policy

The Herald reports:

Police intelligence documents have revealed aggravated robberies of shops have more than doubled in the past two years, with cigarettes being targeted by thieves almost 500 times in a little over a year – quadrupling previous estimates.

Offenders wielding guns, knives and hammers in search of “gold bars” of tobacco have left shopkeepers “constantly living in fear” and resorting to fighting back with their own weapons.

A previously unreleased Police intelligence report from September last year found there were at least 490 burglaries and robberies in which cigarettes were targeted in a 13 month period – more than one a day, and more than four times the estimate the Herald made after analysing media reports of burglaries.

This is a big lesson in unintended consequences. Excise tax on tobacco has been in the past an effective tool in reducing smoking rates. But at a certain level the price becomes so high that it incentivises the black market, and boy has it done that. 500 robberies in just over a year.

This massive increase in robberies is a direct consequence of the excise tax increases. It shows that further increases are not (sadly) viable unless you want to hand over tobacco sales to the gangs.

Just as prohibition of alcohol failed in America, likewise so will taxing tobacco so hugely in New Zealand.

This is not arguing against the excise tax having been an effective tool at certain levels. Just that the higher it goes, the worse the unintended consequences.

It’s sort of like the minimum wage. Stick it up 50c an hour and there is little impact on employment. Stick it up $10 an hour and you’d have a huge impact on employment. Policies that work well at one level, can backfire at others.