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  • Dec 27, 2014
  • Updated: 8:17pm
CommentInsight & Opinion
LEADER

Hong Kong's never-ending battle against smugglers

PUBLISHED : Monday, 13 January, 2014, 4:47am
UPDATED : Monday, 13 January, 2014, 8:55am

Smugglers operate wherever governments try to tax or control the movement of goods. It is the reason that so many illegal cigarettes are finding their way here and baby milk formula is heading north in big volumes. Taxes are also why a secret 40-metre tunnel was built under the parking garage of a Shenzhen block of flats to within a few metres of the river that separates the special economic zone and our city; Guangdong authorities believe it was used to move electronic and luxury items. The nearer the Lunar New Year gets, the greater will be the amounts involved, so customs and police have to ensure that they have adequate resources to fight such criminal activity.

Governments create smuggling with their rules and laws. Most often it is to raise revenue, but in the case of cigarettes and baby formula, it is also for our own good. We have high taxes to discourage smoking. The two-tin formula limit for outbound travellers is to protect our stocks from being depleted by opportunists and mainland shoppers.

The tunnel, fitted with lights and exhaust fans and big enough for a man to crawl through, showed the lengths to which smugglers are prepared to go to avoid paying duties. Police estimate it cost 3 million yuan (HK$3.8 million) to build. History is littered with similarly elaborate schemes; the British government found to its cost in the 18th century that inadequately policing borders led to smuggling becoming acceptable, even for upstanding citizens. Protection is therefore largely down to funding for equipment and manpower.

There was a 41 per cent increase in the number of cigarettes seized by customs by November last year compared with the whole of 2012; the 38 million impounded presumably reflected only a fraction of the true scale of the illicit trade. Scores have been arrested for breaking the formula limit in the past few weeks and one woman was given a five-week jail sentence. The figures prove anti-smuggling measures are being taken seriously, but greater resources are obviously needed. Coupling measures with education and publicity campaigns would help.

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dynamco
europa.eu/rapid/press-release_MEMO-13-472_en.htm
web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTHEALTHNUTRITIONANDPOPULATION/EXTETC/0,,contentMDK:20365226~menuPK:478891~pagePK:148956~piPK:216618~theSitePK:376601,00.html
www.theguardian.com/commentisfree/2011/feb/24/tobacco-taxes-budget
www.who.int/fctc/implementation/WorldBank.ppt
Myths Tobacco Tax
Will reduce government revenues.
Will destroy jobs / hurt particularly farmers
Smuggling (Illicit trade)
Difficult to collect and implement
Regressive (against poor)
WTO, investment bilateral, agreements
singleline
They're two of the three time-honored bits of wisdom put forward by Joe Zhang:
(i) Where there are import duties, there is smuggling.
(ii) Where there is regulation, there is evasion of regulation.
Now you know why the road to hell is paved with sincerity.
Usually the sincerity comes from our well-intentioned but misguided administrative officials, legislative councillors and legal judges.

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