Israel has been taking a strong stance against smugglers efforts, and this is a very good sign for our economy. Smuggling hurts our economy because sales taxes are often not collected when smuggled goods are sold, which hurts the government’s tax revenues. For example, when you purchase tobacco products you pay your taxes on them. Yes, it may seem like your small payment in taxes is insignificant but these small amounts can add up quickly. In addition, smuggled goods are usually worth hundreds of thousands, if not millions of dollars, and the amount of potential sales tax that can be collected on these amounts are significant.
Take the recent example two weeks ago, where Israeli authorities foiled an attempt to smuggle a large amount of tobacco and cigarettes near the West Bank. The value of tax on the items that were intended for the Israeli market was estimated to be worth hundreds of thousands of shekels. Israel’s Crossing Authority, together with ISA (Israeli Security Agency), COGAT (Coordinator of Government Activities in the Territories), Israel Police, and the Israeli Tax Authority, intercept illicit goods on a regular basis at crossings from the West Bank or the Gaza Strip. During 2017, COGAT announced that it had foiled 1,226 smuggling attempts through the Kerem Shalom crossing into Gaza, an increase of 165% from the previous year.
Smugglers try to bring in good that caters to the needs of citizens and tourists such as tobacco and cigarettes. The IDF, for example, has made an effort to snuff out smoking with a ban across 56 bases in the country. These bans have led many smokers to seek other means of getting their regular nicotine fix. Regular smoking is too much of a risk to the health and well-being of members of the IDF. Annually, there are around 2,500,000 tobacco and cigarette products sold on IDF bases. Stringent measures have implemented to prevent people from smoking, but smugglers are still successful in completing their illegal sales.
Since there is so much money involved, all types of products are capable of being smuggled or recreated. There is a wide range of products available, and consumers often don’t realize their purchase is a replica, neither do tourists. Popular items that are being counterfeited to tourists include tobacco products, artifacts, illegal animal products, a portable neck massager and related health products, jewelry, and precious metals. Taxes may be cheaper, and the products themselves may be cheaper, but a lot of money is not being given to the government to help fund the numerous programs Israelis rely on.
Banning too many products and having too many regulations can be a big danger too. As with tobacco products, smugglers will see these bans and regulations as an opportunity to bring these goods into the country, it is basic supply and demand. Goods are often transported among other goods in an attempt to be concealed and unnoticed.
In conclusion, higher taxes and regulations on goods are forcing them to be sold by criminals, while counterfeit goods are also another related issue. We must take the time necessary to identify more routes smuggled goods are entering the country, and how we establish new and revised policies that can curb smuggling and counterfeit goods.