Friday, 9 December 2011

When it Comes to Tax, Make the Rules Up as You Go Along.

This report from the BBC is interesting.

Shops in New York have sprung up selling lose tobacco and tubes to place it in so you can smoke it as a cigarette. The shops also provide rolling machines to allow clients to place the tobacco into the tubes.
"The authorities" are losing tax on this, because they impose a levy on pre-made, pre-packaged cigarettes. The roll-you-own shops don't pay the levy because they don't sell pre-packaged cigarettes: they just provide a way for the customer to produce themselves something that is similar, but not the same as pre-packaged cigarettes. Thus as all good entrepreneurs, they exploit a loophole left by the authorities.

A lawyer for the authorities trying to claw back tax from these shops is quoted as saying "No one would claim that Ikea is not selling furniture just because the clients have to assemble that". But then again, if the authorities put a levy on pre-assembled furniture and left flat-pack stuff tax free, I'm damn sure there'd be lots of shops springing up to help assemble that flat-pack stuff.

The crux is that the tobacco shops are not producing the cigarettes nor are they packaging them, they are only providing the means for the customer to DIY.

But a good lawyer never lets the letter of the law get in the way: any law can be stretched by twisting its words. Especially when tax is concerned.

Witness the horrendous injustices meted out to UK smokers at the hands of our own Customs/Border Agency.

For the record, I'm not a smoker, but I can recognise injustice and blind greed when I see it.

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