Australia’s opposition leader Taylor says excise cut will not increase smoking
Australia’s opposition leader Angus Taylor said the Coalition’s proposed 80% cut to tobacco excise would not lead to an increase in the number of smokers. According to him, illegal cigarettes in the country are already sold for about 15 Australian dollars per pack or less, so lowering the price of legal products should bring their prices into line.
As ABC News Australia reports, if the tax cut were fully passed on to the retail price, a pack of 20 cigarettes could become about 25 Australian dollars cheaper, falling to 16–26 dollars. Taylor said the Coalition aims to make legal cigarettes competitive with illicit tobacco in order to weaken organised crime groups.
No modelling of the impact on smoking was conducted
Shadow Home Affairs Minister Jonno Duniam said the Coalition had not modelled how an 80% excise cut would affect smoking rates. At the same time, the party commissioned calculations from the Parliamentary Budget Office on the scale of the tax reduction, which, according to Duniam, showed a significant change in consumer behaviour under this option.
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According to the tobacco commissioner’s estimate, about half of tobacco sales in Australia currently occur on the black market. According to the report, this generates billions in revenue for criminal groups, contributes to violence, including in Sydney and Melbourne, and reduces federal budget revenue.
The Canadian example
Duniam referred to Canada’s experience, where, after tobacco taxes were raised in the 1980s and 1990s and organised crime increased, federal and provincial authorities cut those taxes in 1994. According to him, smoking rates, especially among young people, temporarily rose afterward, but subsequently fell to 11%.
Canadian authorities later restored the previous tax rates. Critics of this approach said it did not eliminate the black market permanently and also resulted in lost tax revenue and higher youth smoking rates during the transition period.
