A new report by Tulipwood Economics, commissioned by the Australian Association of Convenience
Stores, has found that strictly regulating and taxing vaping products in the same way as tobacco could
deliver over $9.1 billion in revenue over the forward estimates (2024-25 to 2027-28).

The report’s central case scenario policy costing finds a $1.50 per mL excise duty indexed annually at the nominal wage rate applied to regulated nicotine vaping products sold to adults by licensed retailers
would raise nearly $6 billion in excise revenue and over $3 billion in GST revenue.

Key Findings (Under Central Scenario of -0.5 Price Elasticity of Demand):

  • $1 per mL of vape liquid excise (equivalent to 11.4% value tax): $3.869 billion in excise duty and
    $2.998 billion in GST
  • $1.50 per mL of vape liquid excise (equivalent to 17.1% value tax): $5.972 billion in excise duty and
    $3.086 billion in GST
  • $2.00 per mL of vape liquid excise (equivalent to 22.9% value tax): $8.187 billion in excise duty and
    $3.172 billion in GST

Considering a volume-based excise rate of $1.50 is equivalent to a value tax of 17.1%, this central
scenario strikes the right balance by strictly regulating and taxing vapes without incentivizing the black
market, enabling the government to control the market to stop youth access, AACS CEO Theo Foukkare

“As stated in the report, the regulation of e-cigarettes would allow the Australian Government much
greater control over the vaping market to meet its health policy objectives as well as meeting the fiscal
policy goal of maintaining a broad-based tax system that regulates and controls similar adult products
such as tobacco,” he said.

“Importantly, this modelling projects that by regulating and taxing vapes, the market’s growth rate will
also decrease year over year—given that the number of adult vapers increased by 30% in 2023 to more
than 1.7 million, according to Roy Morgan, AACS firmly believe this market control is desperately needed.

“The overwhelming driver of Australia’s youth vaping crisis is the Albanese Government’s vaping ban,
which has led to over 120 million illegal vapes being sold each year by criminals through the black market
who don’t care what they are selling, where they are selling and who they are selling to.

“Making matters worse is the Health Minister’s decision to promote vapes as a medical product, whh
sends the absolutely worst message to kids that vapes are somehow therapeutic goods,” Mr Foukkare

“Australians know vapes are not medicines, and they expect vapes to be strictly regulated and sold by licensed retailers to adults only like any other adult product such as alcohol and tobacco.

“Prohibition of a mainstream adult consumer product like alcohol or tobacco in any country has always
led to the creation of an out-of-control black market enriching criminals, wasting taxpayer dollars and
introducing crime into our communities – it’s beyond time for the Albanese Government to wake up to
this reality and strictly regulate, tax and control vaping products.”

Theo Foukkare is available for interview on 0423 003 133

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