A Year Ago

New York-based Phillip Morris, is looking at using Blockchain technology to track tax stamps on a packet of cigarettes, and it hopes to save, as a business, over $20 Million a year.

Currently, the process of dealing with the tax on packets of cigarettes is largely a slow analog manual process, with a sticky label to show that the tax, of approximately $5.50 per packet, has been paid. It is thought the counterfeiting of these tobacco tax stamps costs the industry and governments $100 million a year. Allegedly, with a good quality photocopier, it's possible to create fraudulent “look-alike” tobacco tax stamps and not pay the tax!

Phillip Morris believes that by using Blockchain technology it can develop a system that has greater transparency and traceability. This offers a much more efficient system for those parties involved i.e. manufacturers, distributors, merchants, and governments, as well as ensuring the correct taxation is applied and collected.

This is another good example of where we are seeing a more “top-down approach“ to the way that Blockchain technology is being applied by businesses on behalf of governments. Instead of a small start-up looking to raise capital via an Initial Coin Offering (ICO), a multinational corporation is using the technology to improve the efficiency and way it conducts business.

Tax duty on alcohol was introduced in the 17th Century and in 2018, it generated over £11 Billion of tax receipts for the UK government. In the UK, if you want to sell more than 35ml of alcohol that is more than 30 percent proof, the container will need to have a stamp fixed to it, based on legislation that goes back to 1979.

Surely there is no reason why the drinks industry cannot also use Blockchain technology, like the tobacco industry, and improve the efficiency, traceability, and transparency in the collection of duty on alcohol?

Logistics And Supply Chain