The Australian federal government just won’t stop increasing taxes on tobacco products. Consequently, cigarette prices have exploded, and the illegal tobacco black market is thriving. The excise tax on a pack of 20 cigarettes jumped from $10.62 in 2015 to $28.06. This drastic uptick has raised alarms as to whether existing smoking policies are working. Even their own Health Minister Mark Butler recently admitted the illicit tobacco market has “exploded.” He cautioned that this increase represents the most serious and urgent danger to public health in the country.
The government’s ongoing tax hikes have some officials questioning their effectiveness. NSW Premier Chris Minns criticized the notion that these tax increases are not contributing to the growth of the illicit market. He stated, “Smoking rates have increased … this would be the only tax in the world where it’s doubled but the rate of revenue collection has halved. Something is obviously happening here.”
Rising Cigarette Prices and Black Market Growth
In fact, over the last 10 years, the federal government has added several tobacco tax increases. Because of this, cigarette taxes have increased dramatically. This unprecedented rise in price has pushed countless smokers into the arms of illegal contraband for a cheaper option. In March, the federal government came out with an additional $156.7 million to combat the migrant illegal tobacco trade. As experts caution, enforcement remains a daunting hurdle.
Butler disclosed that today, organized crime holds a “stranglehold” over the illegal tobacco trade. This monopoly creates the conditions where illegal products are easier for smokers to obtain. This move has recently led to a reversal of the long-term national trend in smoking rates. For the past 12 to 18 months, smoking rates have begun to increase again.
“How much longer will the government refuse to admit they got this wrong? How many more billion-dollar budget shortfalls and violent gang incidents will it take before ministers admit that hiking excise in the middle of a black market boom is only making things worse?” – Pat Conaghan, Shadow Assistant Treasurer
Call for Policy Reevaluation
These increasing worries about how the black market is affecting smoking prevalence have caught the ear of many different political leaders. Conaghan stressed that this is a bipartisan issue, calling for a return to the drawing board on the government’s tobacco tax proposals. He noted, “This isn’t a partisan issue, it’s just common sense. Even state Labor governments are warning Canberra to change course.”
Minns seconded this view, calling for sensible dialogue on tobacco taxation. He warned of the futility of these continual tax increases given their inability to significantly reduce smoking rates as intended. The pandemic presents a vital moment in time to reconsider these misguided efforts and find solutions that protect both public health and cities’ revenue collection needs.
National Implications of Illicit Tobacco Trade
The consequences of the illegal tobacco market go far beyond the lost revenue to each state, but to communities across the country. Butler stated that the issue “started in Melbourne and it spread right through the country,” indicating that no region is immune from its impact. It’s not the first time that the Australian Medical Association has sounded the alarm on how the illegal tobacco supply is fuelling increasing rates of smoking.
Transitional Organized crime is capitalizing on the skyrocketing cost of LEGAL tobacco products. As such, officials should be forced to grapple with the impacts of their actions. The increase in black market activity poses significant risks not only to public health but to law enforcement efforts aimed at curbing organized crime.
