Retailers unimpressed by potential $40 cigarette pack

Alexandra Back
March 17 2016
Retailers fear lost sales and more theft if tax increases continue to force the price of cigarettes up.
Australia’s convenience stores and newsagents fear an increase in theft if the price of a pack of cigarettes hits $40, peak bodies for the industries say.
There were reports this week the federal government would consider increasing the tax on tobacco as a revenue option in this year’s budget.
Labor has already announced the party would increase the tax if elected, and a planned 12.5 per cent increase is scheduled for September this year.
But chief executive of the Australasian Association of Convenience Stores, Jeff Rogut, said increases served only to push smokers towards an “exploding” black market.
“Relentless tax increases play directly into criminals’ hands, while adult consumers who choose to smoke are demonised more and more.
“Retailers who responsibly sell a legal product bear the financial brunt of lost sales. It is short-sighted policy that must be resisted.”
But there are still questions over whether the black market for cigarettes is booming, an argument favoured by tobacco companies and lobbyists.
Mr Rogut said that as price goes up, stores reported an increase in robberies.
Official surveys conducted by the Institute of Health and Welfare and the Bureau of Statistics have found that in the past decade, the number of Australians smoking has fallen 25 per cent, a fall attributed to both plain packaging legislation and tax increases.
But a drop in sales would harm many convenience stores bottom lines, Mr Rogut said, with about 38 per cent of a typical convenience store’s sales and about 27 per cent of profitability made up from cigarettes.
Chief executive of the Newsagents Association of NSW and ACT, Ian Booth, agreed that as the price of cigarettes increased, so did issues of security.
“It certainly would increase the potential for robberies and also increase the attraction of black market or illegal tobacco, and that’s something the government does not derive an income out of,” he said.
Some of the association’s members had chosen to stop selling cigarettes because of the security risk to both shops and staff, he said.
While he said the newsagents’ associate does not dispute the government’s policy of trying to reduce the amount people smoked, any impact on cigarette sales would affect small businesses.
“Any additional increase, purely for the sake of improving the government’s bottom line, would be at the expense of small businesses, particularly newsagents and other small retail outlets,” he said.
As tax increases, the amount retailers receive from sales remains the same.
Buying a pack of cigarettes on Wednesday, Canberra metal recycler Samuel Carroll said he didn’t believe increasing the tax on tobacco was fair.
“It’s addictive, that’s the major problem with it, hey,” he said. “It’s probably the worst thing I’ve ever touched. [$40 packs] wouldn’t make me smoke less, it might make me struggle a bit more, financially.”