Cut cigarette tax or more people will get hurt by illegal trade, says Liberal MP Mary Aldred
Excise duty on tobacco should be reduced to the level it was almost a decade ago, a Liberal MP has said, warning that unless the current tax system is overhauled, more innocent people will be harmed by organized criminals fighting to supply the illicit cigarette trade.
While the NSW government has accused the federal government of contributing to the illicit tobacco boom by not cracking down on the import of illicit products, Mary Aldred said it was clear that years of high consumption rates were leading to a social crisis that was causing serious damage to the federal budget.
This imprint reported on Monday new research from Oxford Economics, commissioned by one of the country’s largest independent retailers, that supports a 30 percent cut in consumption as part of a broad package of measures aimed at undermining the illicit tobacco trade.
The federal budget faces a $67 billion shortfall in tobacco excise taxes in the decade to 2028-29 despite a sharp increase in tax rates as smokers turn to illicit products. Illegal cigarettes can cost less than a third of the price of a legal product.
Aldred, whose electorate in Melbourne’s east faces criminals selling illegal tobacco or trying to put pressure on legal dealers, said the entire illegal tobacco issue should go to national cabinet for a co-ordinated approach, as well as reducing excise duties to 2017 levels.
A national taskforce led by the Australian Federal Police should oversee the targeted police response to the wave of criminal activity.
He said some of the country’s most notorious organized criminals oversaw incendiary bombings and assault raids that claimed the life of at least one person. Victorian woman Katie Tangey.
Aldred told the imprint: “I’m really worried that if we don’t do something different we’ll see more people getting hurt.
“The federal government is getting less revenue, more people are smoking, and we’ve had the biggest increase in organized crime we’ve seen in decades. Something needs to change.”
Oxford Economics found that without a change to the tax structure and tougher policing at borders and retail outlets, 90 per cent of all cigarettes purchased in Australia will be illegal by the end of this decade.
It was found that a large cut in excise duty would be enough to encourage smokers to switch to legal cigarettes.
The NSW government has previously supported reducing tobacco duty.
NSW Health Minister Ryan Park said he would be open to “any policy measures” to reduce tobacco use, noting that much of the illicit product is imported.
“This public health failure has seen states and territories need to devote more resources to licensing, enforcement and dealing with the health problems that arise from this,” he said.
“In addition to the demand created by the SCT, I am also concerned about the passage of these products across our borders, and it is clear that more needs to be done in this regard.”
New federal Liberal leader Angus Taylor said the Coalition went into the last election promising to decriminalize vaping and suggested the current policy system had failed.
“I think we need to be sensitive to this and realize that there is a big problem and the current way of governing is not working,” he said. Kyle and Jackie O’s Show.
Finance Minister Jim Chalmers announced a two-year, $150 million package targeting the illicit tobacco trade in his latest budget. In the same budget, it announced a decrease in expected tobacco excise tax collections of approximately $17 billion.
Prime Minister Anthony Albanese did not comment on whether the government should freeze or cut tobacco duty, saying it was an issue to be addressed in the budget.
But he signaled that further restrictions on illegal trade were an option.
“There are two reasons for this [the tobacco excise] was replaced. It’s not just about revenue,” he told ABC radio on Tuesday.
“It’s also about sending a message about health. When it comes to illegal tobacco, we spend a lot of money. A lot of those taxes go towards cracking down on illegal tobacco and the criminals associated with it.”
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Shane Wright is senior economic correspondent for The Age and The Sydney Morning Herald.Connect with: X or email.
