Labor’s tobacco excise policy slammed

The Labor Party’s plan to substantially increase the excise on tobacco has been slammed by both manufacturers and retailers as a move that would increase illicit trade through organised crime.

Imperial Tobacco Australia’s Head of Corporate and Legal Affairs, Andrew Gregson, says excise and illicit trade are proven to be directly linked, with organised crime groups set to make a fortune should Labor win power and go ahead with its policy.

“Ridiculously high levels of excise are precisely what drives the illicit tobacco trade – but we would say that, wouldn’t we? So you don’t have to take our word for it. Instead, consider the opinions of policy experts who have this to say:

  • “We are seeing an increase in organised crime entities involved in this. I put it down partially to the fact that the excise in duty payable on tobacco is increasing.” – Roman Quaedvlieg, CEO, Australian Border Force, Senate Estimates, February 23, 2015.
  • “Serious and organised crime will use the same infrastructural spine upon which it imports prohibited drugs, to import tobacco … [Illicit tobacco] … now requires the wit and wherewithal of serious and organised crime.” – Source as above.
  • “Illicit tobacco is a real priority for the Australian Border Force, simply because of the involvement of organised crime groups and transnational crime groups, the sheer size of the profits that are available to those groups, and the fact that those groups don’t discriminate between commodities.” – Michael Outram, Border Force Deputy Commissioner for Operations, The World Today, ABC, September 30, 2015.
  • “There are clear links to organised crime and we know that groups smuggling illicit tobacco into Australia are also involved in other illegal activities such as narcotics.” – Peter Dutton, Minister for Border Protection, October 16, 2015.
  • “The illegal tobacco trade is harmful to people’s health, harmful to Australia’s tax revenue …” – Will Day, ATO Deputy Commissioner, March 31, 2015
  • “The illicit tobacco market is a priority for Commonwealth law enforcement and regulatory agencies. It costs millions in lost revenue and is dominated by serious and organised crime groups.” Australian Crime Commission, National Strategic Assessment.
  • “It is highly likely that the illegal tobacco market will remain attractive for serious and organised crime groups because of the very large profits that can be made with very low risk.” – Australian Crime Commission, ‘Organised Crime in Australia’, 2015.

Meanwhile, the Australasian Association of Convenience Stores has described Labor’s policy as lacking imagination and blatantly discriminatory.

AACS CEO Jeff Rogut says Labor’s plan to increase taxation on tobacco is yet another example of consumers being demonised for using a legal product.

“There is no greater example in the current day and age of lazy, shallow and hypocritical policy than taxing smokers to pay for whatever politicians think will garner votes,” he said.

“No longer even masking the hypocrisy of their actions, some politicians turn their ire blindly towards smokers, not for a moment considering that these adults already pay more than their fair share of tax, nor that many retailers will be potentially affected as those who choose to smoke are pushed more and more to the black market. The pretext that moves like this somehow support health no longer even seem to be a consideration.”

Mr Rogut says Australia is one of the world’s strongest markets for illicit tobacco because of the way legal tobacco is treated from an excise and regulatory perspective.

“The amount of illegal tobacco that is being sold and consumed in this country has exploded since plain packaging was introduced and as the endless series of tax hikes take a compound effect,” he said. “What politicians have thus far failed to acknowledge is that, with the rise in the illicit tobacco market, the amount of tax revenue that goes uncollected by Government rises too.”

According to the most recent KPMG research, the market for illicit tobacco has grown by almost 30 per cent in two years, costing the Government an estimated $1.35 billion in lost tax revenue last year alone.

“Relentless tax increases play directly into criminals’ hands,” Mr Rogut said. “Meanwhile adult consumers who choose to smoke are demonised more and more.

“And retailers who responsibly sell a legal product bear the financial brunt of lost sales. It’s short-sighted policy that must be resisted.”