Tuesday, 15 May 2018

Australia: world leader in tobacco control

I wrote yesterday about the early indications that plain packaging has not only failed in Britain but has been counter-productive. Meanwhile in Australia, the home of plain packaging, the government is desperately trying to contain the booming black market in tobacco that its policies have created.

Last week it created a new Tobacco Taskforce to deal with an illicit trade that is officially estimated to supply 864 tonnes of Aussie smokers each year. 

In a single operation in Queensland, 31 tonnes was seized, which would have netted $29 million in duty. In Victoria, $48 million has been foregone on the tobacco seized, which weighed in at a nation-leading 53 tonnes. Seizures in NSW so far this year have accounted for 14 tonnes or $13 million in foregone revenue.

The previous financial year, the ATO seized 117 tonnes at an estimated total value in terms of duty of $90 million.

Estimates from the Department of Home Affairs and the ATO say this is merely a fraction of the total revenue foregone each year, which is as high as $600 million.

Everything going well in the world leader of tobacco control, then!

It's a large and growing problem and the government has had no choice but to pull its head out of sand because it is losing a fortune in tobacco duty. It has increased the maximum prison sentence for tobacco smuggling to ten years and has passed a law requiring people who import tobacco to have a licence. That should do it!

It has even banned cash payments of more than $10,000 dollars which, as Reason reports, will have an adverse impact on many legal traders.

There is, of course, an obvious and workable solution but no Aussie politician will mention it for fear of being accused of threatening Australia's imaginary smoke-free future...

Australia's black market for tobacco is easily and obviously tied to its massive tax rate. Cigarettes cost $30 a pack there! Yet the government claims that once it cracks down and gets all those missing billions in revenue, it'll be able to lower taxes. They just need to spend an additional $318 million first to create a brand new task force to go after the black market.

That won't work. The government needs to deal with the root cause of its black market: itself. The state has forced prices of tobacco so high that people are resorting to illicit means to get their hands on the stuff. Violating the privacy of all Australian citizens—demanding that they engage in financial transactions the way you want them to—will not do anything to fix this problem.

It has been five and a half years since plain packaging was introduced and four and half years since the government started ramping up taxes by 14 per cent per annum. The result has been exactly what anybody with any brains expected. Look at the red line below. That's the price of tobacco (via Sydney Morning Herald).

Only the most blinkered or dishonest anti-smoking zealot would deny that a problem exists. If you go to the laughable smear-wiki Tobacco Tactics, for example, you will find a page dedicated to claiming that the illicit trade has not risen since plain packs began in Australia. And it is worth remembering that the 'public health' spivs did not merely deny that the black market would grow in 2012, they denied it was growing for years afterwards. Here's a study by the prolific plain packs campaigner Melanie Wakefield from 2014, for example:

One year after implementation, this study found no evidence of the major unintended consequences concerning loss of smoker patrons from small retail outlets, flooding of the market by cheap Asian brands and use of illicit tobacco predicted by opponents of plain packaging in Australia.

And here's another of her studies from 2015:

While unable to quantify the total extent of use of illicit manufactured cigarettes, in this large national survey we found no evidence in Australia of increased use of two categories of manufactured cigarettes likely to be contraband, no increase in purchase from informal sellers and no increased use of unbranded illicit ‘chop-chop’ tobacco.

Haha! I was always against plain packaging but it was worth it coming into force just to see the cranks and liars exposed.

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