Albanese Government resists push to ease ‘sin’ taxes on ciggies & alcohol
High excises are forcing drinkers and smokers onto the black market, but Australians are unlikely to see any immediate relief in the cost of alcohol and cigarettes.
Australians are unlikely to see any immediate relief in the cost of alcohol and cigarettes as the Albanese government resists growing pressure, including from a Labor Premier, to reduce the high rates of excise forcing drinkers and smokers to the black-market.
New South Wales Premier Chris Minns has backed Pauline Hanson’s push this week to reduce tobacco taxes saying the current Commonwealth approach was not working and warned the demand for illegal products is “exploding”.
“The grim reality is that the excise has pushed up the legal cost of cigarettes in our economy, and at the same time, the black-market has exploded,” the Premier told the ABC on Wednesday.
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By continuing you agree to our Terms and Privacy Policy.“So, rather perversely, rather than the cost of cigarettes declining and less people smoking, we’re seeing accessibility and affordability plunge. And as a result, people smoking it seems to me at massive numbers, and that’s the opposite of the intended policy.”
Appearing at the National Press Club, Federal Assistant Treasurer Daniel Mulino, above, was repeatedly challenged over whether the current high excise applied to tobacco and alcohol was fuelling a growing black-market run by organised crime gangs.
Dr Mulino acknowledged “both of these issues are in the news a lot” and admitted organised crime was “entrenched” in the cigarette black market but insisted enforcement was a better way to tackle the problem rather than lowering excise.
“The focus I think needs to be on enforcement, and I think that’s what we’ve said for some time now. We’re working with State governments, we’re working with Territory governments. We have made real progress across the board,” he argued.
Challenged to nominate an example in Australia where policing alone had addressed a black-market problem, Dr Mulino responded that “the price incentive in tobacco excise I think will not make a material difference at this point”.
Critics of Australia’s high tobacco excise argue overall smoking rates are increasing, revenue from legal product sales are falling all while organised crime gangs are expanding their illegal operations around the country.
Earlier this week, One Nation unveiled a policy to slash the current tobacco excise by 75per cent, which it claimed would bring down the cost of legal cigarette packets by around $20 while smashing Australia’s illicit trade.
Senator Hanson insists One Nation’s policy, which includes a pause on indexation for three years, is not to encourage smoking but to take on organised crime gangs and smash the black-market.
Citing recent comments from Amber Shuhyta, the Commissioner for Illegal Tobacco and E-cigarettes, the Assistant Treasurer claimed that even if excise dropped substantially there would “still be opportunities” for organised crime to make a profit.
Earlier this week the Australian Tax Office announced it was also cracking down on operators rorting tax breaks intended for craft distilleries, who then produce cheap, excise-free alcohol for the illicit market.
Asked by The Nightly whether he was concerned that similar problems seen in the illegal tobacco trade were now emerging in the alcohol sector, Dr Mulino argued that industry was “in a different place”.
“We are looking at this issue. The ATO is examining it from a range of perspectives, both compliance with the remission scheme in relation to spirits, for example, but also potentially any linkages with organised crime,” the Assistant Treasurer said.
Steven Fanner, the Executive Director of the Spirits Council of Australia, has welcomed this week’s ATO crackdown but warns high rates of excise also need to be addressed.
“Whenever you’ve got a situation where the tax going to government is a bigger part of the sticker price than the material or labour involved in making a product, you’re creating a major incentive for tax avoidance”.
“The ATO’s intervention is welcome and shows the Government is awake to the risks, but the cop on the beat is only as good as the rules they enforce and ultimately more will be needed,” he told The Nightly.
