Ireland has had more than its share of fiscal problems over the last decade, having been long considered one of the original “PIGS” nations. (Portugal, Ireland, Greece and Spain) They actually did a good job in a number of areas when it came to reducing the tax burden on employers and attracting new business, working their way up to a somewhat more stable position than the real sinkholes like Greece. But in one area of revenue generation they fell victim to the same temptation as many states in the US… they went for the sin taxes. Cigarettes in Ireland are some of the most expensive in the region now, thanks to the policy, coming in at nearly 10 euros per pack.

So how did that work out for them?

CIGARETTE smuggling continues to soar in Ireland, with new Department of Finance figures showing that tobacco excise tax receipts are falling dramatically short of targets, even though taxes have increased and the number of people smoking has remained constant at 29 per cent of the population…

Criminal gangs are openly selling smuggled cigarettes on the streets of central Dublin and other cities, door to door and at fairs and markets. Counterfeit cigarettes can be brought to the Irish market at a cost of just 20 cents a pack and sold on the black market at €4.50. The average selling price of legitimate cigarettes is €9.20 a pack.

Ireland – at least in this regard – provides a microcosm lab experiment of what’s been going wrong in the United States when taken to its ridiculous conclusion. There is very little enforcement money available to provide the resources needed to stop such activity. (The linked article points out that they only have two mobile X-ray scanners available in the entire state to check tax stamps) And the cops have a lot of serious crime to deal with rather than chasing problems like this. Hence, pirates are actively going door to door in broad daylight filling the orders of those eager to save 50% or more on their purchases.

We’ve covered it here before. It happens in Chicago. It happens in New York. And in all the states that border them. Social engineering results in less tax revenue, not more, and simply drives more otherwise honest citizens and small business people onto the government’s lists of “bad people.” Meanwhile, real problems of fiscal insolvency go unattended. I’m not hoping that Washington or our tax grabbing states will learn from the lesson of Ireland, but they could if you let them know.