AACS: TOBACCO TAX IS OFFICIALLY ABOUT MONEY, NOT HEALTH

MEDIA RELEASE

April 15, 2016: For all its talk of innovation and offering a fresh perspective, if reports suggesting the Turnbull Government will raise tobacco excise to meet its budget woes are true, it will confirm this Government is as lazy, short-sighted and discriminatory as those which preceded it, says the Australasian Association of Convenience Stores (AACS).
Further, according to AACS CEO Jeff Rogut, it will represent the clearest admission yet that raising the tax on legal tobacco has nothing to do with health and everything to do with revenue.
“It’s not just adults who choose to smoke, it’s Australians across the board who deserve better than this reactionary, unimaginative and uninspiring policy. Smokers are already excessively taxed in Australia, more than almost any other country in the world, and to target this group further to fill the budget gap is discrimination, plain and simple,” Mr Rogut said.
“Of course, there are always other consequences, such as the loss of business to retailers, especially small retailers and the market for illicit tobacco surges ahead.
“Most disappointing of all is that the pretext that raising tobacco tax is in any way linked to health benefits has been dropped. It has never been about health and it’s interesting Government no longer even bothers to peddle this line,” he said.
Mr Rogut said further increases to the cost of legal tobacco would be especially concerning given the huge rise in the illicit tobacco market driven by endless excise hikes and plain packaging.
“Be it through necessity or willingness, more and more consumers are being pushed to the black market to purchase tobacco as the endless series of tax hikes takes a compound effect. As such, Australia has become one of the world’s most lucrative markets for tobacco smugglers,” Mr Rogut said.
The Australian Government has itself acknowledged the dangers of illegal tobacco, even convening a Senate inquiry to address the issue. It’s little wonder: according to the most recent KPMG research, the market for illicit tobacco has grown almost 30% in two years, costing the Government an estimated $1.35 billion in lost tax revenue last year alone.
But Mr Rogut said it’s counterproductive to initiate an inquiry into the illicit market on one hand, then introduce further tax increases to legal tobacco – directly boosting the illicit market – on the other.
“We strongly urge common sense to prevail as the Government puts the finishing touches on next month’s budget. Raising tobacco excise is having a clear counterproductive effect, with the illicit market flourishing as a result of the existing regulatory framework,” Mr Rogut said.
“Not only does Government actually miss out on revenue as the illegal market grows, but criminals profit and minors have easier access to contraband products.
“All the while, adult consumers who choose to buy a legal product are singled out to pay even more. It’s not fair or smart, it’s discriminatory and dangerous,” he said.
The AACS is not an arm of, nor does it lobby on behalf of, the tobacco industry. It is the peak body for the convenience industry in Australia, representing the interests of over 6,000 stores.

For further information, please contact:
Jeff Rogut
Chief Executive Officer Ph: (02) 9279 4770
Ph: 0467 873 789
Stephen Naylor
Wise McBaron Communication Australasian
Association of Convenience Stores