Major call on cigarettes amid black market fears
The Labor government will not review a tax on Australia's cigarettes despite fears surging prices are contributing to the black market trade.
Treasurer Jim Chalmers ruled out changing the tobacco excise this week after NSW Premier Chris Minns suggested a lower tax might reduce criminal trading.
'More people are giving up the darts, but more people are also doing the wrong thing (and) I'm not convinced that cutting the excise on cigarettes would mean that that would be the end of illegal activity,' Chalmers said.
'I respectfully disagree with Chris... I don't think the answer here is to make cigarettes cheaper for people, the answer here is to get better at compliance.'
Earlier in the week, Minns floated the idea that the excise might be contributing to the black market trade while also failing to secure increased government revenues.
'We need to have a look at how big this excise is, how it's driving illegal tobacco sales in our community,' Minns said.
'And is it the best use of NSW Police time to be devoted to tobacco sales, when in the end the federal government's not getting the excise that they thought — they're not getting that tax that they would get from that massive increase.'
He said the excise had nearly doubled in six years from $16 to $28 per pack while revenue had decreased in line with lower consumer demand.
The tobacco excise reached a high of $1.40 per cigarette in March, the same month $7billion was wiped from the budget's excise projections to 2029.
Many believed the high price of cigarettes in Australia - among the world's highest - would continue to push consumers towards e-cigarettes or the black market.
Smoking continues to be a leading cause of death, killing more than 24,000 Australians each year according to the Australian National University.
Meanwhile, the ATO estimated the value of illicit tobacco entering Australia increased from $980million to more than $6billion in the six years to 2022-23.
Economist Chris Richardson said increasing the excise without appropriate enforcements amounted to an 'epic budget fail'.
Following the budget figures, Health Minister Mark Butler announced a $156million investment to assist state and federal agencies in cracking down on illicit tobacco.
In a statement, Chalmers acknowledged the 'significant problem of illegal tobacco' but endorsed enforcement over price measures.
'Tobacco excise is an important public health measure to encourage people to give up smoking,' Chalmers said.
'We are working with NSW and the other states and territories when it comes to the enforcement challenge with illegal tobacco.'
NSW Treasurer Daniel Mookhey was undaunted by Chalmers' disapproval, saying he intended to raise the issue with his federal counterpart.
'We can't ignore the fact there's an interaction between the federal exercise and the emergence of illegal tobacco,' he said.
'The first response needs to be through Health Ministers but I'm certainly of the point that I will make the argument to the Commonwealth, to Mr Chalmers and to others as well.'
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