EXCISE HIKES ANOTHER SHOT IN THE ARM FOR ILLEGAL TOBACCO TRADE

MEDIA RELEASE
November 8 2013

With recent large scale busts highlighting the extent of illegal tobacco trade, as well as the detailed KPMG report into the practice released this week, the Abbott Government’s intention to proceed with Labor’s tax increases to legal tobacco products not only represents a short-sighted and financially irresponsible approach, it also encourages criminal activity according to the Australasian Association of Convenience Stores (AACS).

AACS CEO Jeff Rogut urged the Government to learn from countless past lessons that clearly demonstrate that when tobacco excise is increased, the trade of illicit tobacco flourishes.

Meanwhile the retailers of legal tobacco products suffer a critical loss of income as those seeking cheaper alternatives support illegal sellers, which appear to be flourishing. Plain packaging of tobacco appears to have also exacerbated the influx of illicit tobacco products.

“Increasing tobacco excise to fill the budget gap is one of the most consistently unsuccessful exercises undertaken at a Treasury level. With the subsequent shift to illegal tobacco products that invariably occurs, the Government actually misses out on collecting the maximum amount of revenue accessible through legal tobacco sales,” Mr Rogut said.

The KPMG report estimates this loss of revenue to Government to be around $1billion annually.

“At the same time retailers on the front line have to bear the financial brunt of this misdirected grab for revenue while dealing with the increasing frustration of consumers of legal tobacco products,” Mr Rogut said.

“Should the Government proceed with implementing Labor’s policy, it will be a case of history repeating itself. Small businesses suffer, there’s a rise in illicit tobacco trade, Government revenue from tobacco sales actually decreases and consumers of legal tobacco products simply switch their preference to cheaper brands. All the while the health impacts are completely ignored.

“We strongly urge the Government to consult with our industry prior to implementing knee-jerk responses that cost everyone except those criminals involved in the illicit trade of tobacco.

“It’s time the Government set its mind on genuine, sustainable answers to the budget deficit instead of reverting to failed policy solutions,” Mr Rogut said.

Further information:
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores
Ph: 0467 873 789

Media enquiries:
Stephen Naylor
Wise McBaron Communication
Ph: (02) 9279 4770