Young People in the Field of Illegal Tobacco

Young People in the Field of Illegal Tobacco Sophie Cartwright

Illegal tobacco, commonly referred to as chop-chop

Outline of Paper • Aim; • History and current arrangements of the tobacco industry; • Model – Field of illegal tobacco; • Method; • Findings; and • Conclusion

Location of study • Three regions in Australia that grow tobacco • Myrtleford is located in NE Victoria • Resident population of 3500 people • 120 tobacco growers in Myrtleford

Tobacco and Revenue • 1997 the High Court found that it was illegal for states and territories to levy the Business Franchise Fee (BFF) – a tax on tobacco products – as it was effectively an excise duty • The High Court found the BFF to be invalid - the rate of excise went from $84 to $235 per kilogram overnight • The differential between the excise duty and the BFF was then returned to the states

Tobacco grower Co-op $2 – $7/kg $3 - $7 TAX $$$ ATO Manufacturers Excise $$$

Chop-chop • $3000 to $5000 (tax free) per bale of tobacco (as opposed to $700 sold legally) • 500 grams of chop-chop = 500 ready made cigarettes • 250 grams chop-chop = $27 (compared to $100 of legal tobacco)

The data • Focus Group discussion • Two secondary colleges • Age: 14-18 years • Mixed classes drawn from Years 10, 11 and 12

Model of the field of illegal tobacco • Pierre Bourdieu (1977, 1990, 1998) • Social field and social relations • Application of Bourdieu’s theory – personal finance (1998), welfare system (1998), the arts (1971), education (1984), farming (2003) and the medical profession(2002)

Types of Capital • Economic capital refers to material wealth and power; • Social capital refers to social networks and group membership; • Culturalcapital consists of social knowledge, education and cultural goods; and • Symbolic capital is the form assumed by all types of capital. It captures intangible aspects of prestige and legitimacy

Figure 1. Agents in the field of illegal tobacco Chop-chop Traders Regulators Community

Figure 2. Hierarchy of capital in thefield of illegal tobacco + High Regulators Chop-chop Traders Capital Community - Low

Findings - Regulators • “I think a lot of people are getting to the stage where they think it’s not going to last much longer. Whereas, 10 years ago people thought tobacco was going to last forever.”

“On a kilo of good tobacco it’s about $6.75…The government gets around $270...” • “People are getting into chop-chop because they can make 20% more for each bale. You can make heaps more selling chop-chop just by selling the occasional bale.”

“Growers are being offered more money for their tobacco by criminals. If you are in debt $100,000 then someone comes down the road and offers a lot more for your kilo instead of $6.75. I mean, which one are you inclined to take?”

“None of their tobacco gets replaced if the tobacco is stolen. So it’s really on the farmers to make sure that everything is locked up. It’s a bit of a lose-lose situation for the farmers because they either lose tobacco or they’re going to get fined by the ATO for not having their place locked up.”

“If they [government] gave the growers an extra 50 cents per kilo none of this would have happened…If the growers received an extra 50 cents they’d be a lot happier. Then you’d find that people would look after things a bit more and they’d be able to tell those people who were coming around to get lost or call the police. They wouldn’t need to put as many police out on the roads.”

“If the government wanted to stop it the best thing to do would be to reduce the tax.” • “What I think they should do is give you a reward…the Tax Office are saying ‘tell us who they are, tell us who they are.’ You want me to tell you who they are and do your job…you might as well give us $100,000 for risking our lives. If you dob someone in and they get caught, they might send someone around to kill you.”

Chop-chop traders • “You’ve got people coming around hassling you about tobacco.” • “Dad’s had a car of 4 guys get out and ask him if he was willing to sell them tobacco.”

“Growers get hassled that much. They keep coming around three, four, five, six times a day. Every hour. Do you want to sell tobacco? Do you want to sell tobacco? People get that annoyed they just sell it to them.” • “I think that once you get into it you can’t get out…it’s not the average grower growing it for some hippy in parliament. It’s pretty serious people who have something to do with crime and the growers are pretty much stuck in it.”

“There’s a bloke here with a shed that’s full of security but he’s about 2 – 3km off the road and people just went in there and found the shed…They see it as an easy target. They can drive in and load up the bales…people can’t hear the alarm go off.”

“Last year we had tobacco stolen from the properties either side of us and both were very close to our house.” • “Some owners may live in town or on another farm and have to visit their crops on a regular basis. So they’ll [traders] break into those sheds. They’re always well organised they know where to go.”

“Last year there was a campervan, a husband and wife team, and the whole of the inside of the camper van was stripped…It had shelves and stuff for storing tobacco and the police caught them and they found all of this stolen tobacco in there.”

“Just out of Wang [Wangaratta is a neighbouring town of Myrtleford] these bales got stolen. These blokes pulled up in a semi-trailer with a crane and they had the witches hats out on the road and they leant over the fence, picked up the bales and put them on the truck. They looked like road workers and if you look like road workers…you could do it easy.”

Community • “Growers use to hang a sign on their fence or shed that read ‘Pride in Tobacco’ with the grower’s surname underneath. You don’t see many of them around anymore.”

“I reckon if the tobacco industry was phased out now the whole population would drop significantly. I mean people would go – what’s the point in staying here?” • “Local businesses would shut down.” • “Schools would have to merge.” • “Unemployment would go up. So many people work on tobacco, it’s just huge.”

“You’d have a shotgun at your front door.” • “It’s like the mafia.”

Conclusion • Three key social agents – regulators, chop-chop traders and the community • Regulators and chop-chop traders – active • The community – passive

Evidence that the community was rich in social and cultural capital e.g., strong community networks and ties, knowledge about the tobacco industry, its history and effect of illegal tobacco • Participants viewed the community as having no power to challenge the authority of regulators and chop-chop traders

Chop-chop traders exerted power over growers • Chop-chop traders persistent behaviour and threats towards the growers intensified their position of vulnerability • Action of chop-chop traders were deviant but their smart tactics also impressed participants • Capacity of chop-chop traders to cause problems for regulators and authorities

Participants recognised the purpose of the regulators’ role, however, they did not necessarily value or respect their policies • Implications – (a) young people’s experience of regulators can be shaped at an early age (b) warning for regulators that future generations’ perception of authority and experiences can impact on future regulatory compliance (c) young people are our future taxpayers – their perceptions are important

What does this mean for Responsive Regulation? • Excise increase? – (a) this can increase growers’ unrest and disengagement towards regulators; and (b) increase in the supply and demand for chop-chop • Reduction in price or demand for tobacco? (b) loss in revenue for the government; and (c) loss of confidence in domestic policy

Resilient and persist in their target of chop-chop traders • Government must maintain good rapport with tobacco co-op • Complexity of the situation in which the Myrtleford tobacco growers are operating and the need for cooperation among government departments

Thank you Sophie Cartwright Centre for Tax System Integrity, Research School of Social Science, The Australian National University T: +61 2 6125 3293 E: Sophie.Cartwright@anu.edu.au

Young People in the Field of Illegal Tobacco