More and more consumers are being pushed to the black market as the endless series of tobacco tax hikes takes a compound effect.
For all its talk of innovation and offering a fresh perspective, if reports suggesting the Turnbull Government will raise tobacco tax to meet its budget woes are true, it will confirm this Government is as lazy, short-sighted and discriminatory as those which preceded it.
Further, it will represent the clearest admission yet that raising the tax on legal tobacco has nothing to do with health and everything to do with revenue.
It’s not just adults who choose to smoke, it’s Australians across the board who deserve better than this reactionary, unimaginative and uninspiring policy. Smokers are already excessively taxed in Australia, more than almost any other country in the world, and to target this group further to fill the budget gap is discrimination, plain and simple.
Of course, there are always other consequences, such as the loss of business to retailers, especially small retailers, as the market for illicit tobacco surges ahead.
“Most disappointing of all is that the pretext that raising tobacco tax is in any way linked to health benefits has been dropped. It has never been about health and it is interesting Government no longer even bothers to peddle this line.
Further increases to the cost of legal tobacco would be especially concerning given the huge rise in the illicit tobacco market that is driven by endless excise hikes and plain packaging.
Be it through necessity or willingness, more and more consumers are being pushed to the black market as the endless series of tobacco tax hikes takes a compound effect. As such, Australia has become one of the world’s most lucrative markets for tobacco smugglers.
The Australian Government has itself acknowledged the dangers of illegal tobacco, even convening a Senate inquiry to address the issue. It’s little wonder: according to the most recent KPMG research, the market for illicit tobacco has grown almost 30% in two years, costing the Government an estimated $1.35 billion in lost tax revenue last year alone.
But it’s counterproductive to initiate an inquiry into the illicit market on one hand, then introduce further tax increases to legal tobacco – directly boosting the illicit market – on the other.
We strongly urge common sense to prevail as the Government puts the finishing touches on next month’s budget. Raising tobacco excise is having a clear counterproductive effect, with the illicit market flourishing as a result of the existing regulatory framework.
Not only does Government actually miss out on revenue as the illegal market grows, but criminals profit and minors have easier access to contraband products.
All the while, adult consumers who choose to buy a legal product are singled out to pay even more. It’s not fair or smart, it’s discriminatory and dangerous.
Jeff Rogut, Chief Executive Officer, Australasian Association of Convenience Stores
