‘Moronic': Fury over Australia's tobacco prices

News.com.au

a day ago

OPINION
I don't know about you but when I'm doing something and it has unintended consequences, I usually stop.
It seems like the sensible thing to do.
I mean, if you took paracetamol to ease your headache and it made you chunder up your guts you'd probably look for another solution.
Enter Treasurer Jim Chalmers. He doesn't look for another solution – he keeps doing the same thing, even if it's provably moronic.
A far more practical Labor man, NSW Premier Chris Minns, this week stuck his neck out and said what I've been saying for years – that the tax on cigarettes is far too high and it has caused a massive market for illicit cigarettes which fund organised crime.
Regular readers and viewers of my programmes on Sky News will know this has long been a bugbear of mine.
I tried to warn just how bad this would be but no one seemed to take notice.
With more than 100 tobacco shops firebombed in Victoria as warring gangs fight to control the black market and that war now spreading to Sydney, Mr Minns has had enough.
He warned that police would have to be taken away from other important crimes, such as domestic violence, and diverted to illicit tobacco if there was any hope of stemming the rising tide of dodgy durry shops.
But he'd rather not do that. He'd rather the federal government just took responsibility for the fact it caused this mess and cut the tobacco tax to neuter the illicit market.
'The massive excise increase to tobacco has meant that people haven't stopped smoking,' Mr Minns announced.
'They've just transferred their sales into illegal tobacco sales, which I don't think is helping New South Wales or any other state.
'So my view is, let's have a look at this policy, and is it working.'
It's not.
Senior police in Victoria, too, have raised the issue of cutting – or at least pausing – the tobacco excise with the federal government.
Tin-earred Dr Chalmers said on Wednesday that he didn't 'think the answer here is to make cigarettes cheaper for people'.
'I think the answer here is to get better at compliance,' Dr Chalmers said.
'I'm not convinced that cutting the excise on cigarettes would mean that would be the end of illegal activity.'
Does he honestly understand what he's saying?
Reducing the tobacco tax, which has driven the price of legal ciggies to $50 or $60 a pack, wouldn't make cigarettes cheaper for people. They're already buying them for $15 or $20 under the counter in dodgy shops. He may have missed it but that's the point here.
And of course it wouldn't be the end of illegal activity – people will always break the law – but it would help to reduce or, at least, stall the black market. This all or nothing approach is what has made illicit tobacco so lucrative for hardened criminals.
As for compliance – why should it be the responsibility of the states to fix up the mess made by the feds?
The federal government levies the tax that has made this crime so prolific – nearly 40 per cent of tobacco consumption last year and rising – but the states have to police the shops and sales.
It's not Mr Minns' fault that Dr Chalmers and co are too stupid to admit they've inadvertently become the biggest mates of Middle Eastern crime gangs.
Mr Minns would rather his coppers investigate murderers and wife-bashers. Dr Chalmers instead says the premier should run a protection racket for his extortionate tax on a legal product.
Even in pure monetary terms Dr Chalmers must see that the massive excise has failed.
An extraordinary $17.6 billion of tobacco tax has disappeared from the federal budget's forward estimates in the past year alone.
Last year's federal budget projected $11.55 billion in tobacco tax this financial year. April's budget downgraded that to $7.4 billion – a 36 per cent reduction.
Not because 36 per cent of smokers gave up in the past 12 months – they just moved to the illegal stuff.
The tax take on tobacco has more than halved in five years despite the tax payable on a packet nearly doubling.
Again, it's not because the number of smokers has halved in five years.
Name me another tax in the history of Australia that has doubled, only for revenue to halve.
The government knows all this but they're too embarrassed to reduce the excise because that would be to admit that at least a decade of 'public health' policy has been wrong.
So nothing will change, this will only get worse and I will again be saying that I told you so.