AARON PATRICK: Federal Treasurer Jim Chalmers needs to stop creating work for organised crime

Jim Chalmers today dismissed some common sense about the illegal tobacco trade from the NSW Premier, who blamed a crime wave on tax increases that have driven cigarettes to as much as $75 a packet.

“I’m not proposing to cut taxes on cigarettes to make them cheaper for people,” Dr Chalmers said.

The Treasurer should read the news.

On Tuesday, the NSW Police, the Australian Federal Police and Border Force arrested what they said was a methamphetamine and cocaine importation gang in Sydney. Among the stash seized were 20 million cigarettes, allegedly smuggled into Australia to avoid $42 in taxes on each packet of 30.

The arrests, and others before it, show the unintended consequence of a decades-long campaign to reduce cancer rates by driving up the cost of smoking to prohibitive levels. Cigarettes are so expensive, organised crime has taken up a business opportunity to undercut the legal market.

Cigarettes or domestic violence?

The same day as the arrests, NSW Premier Chris Minns pointed out that his Government is going to have to spend $300 million extra fighting a problem caused by Federal tax policy.

This means “allocating police officers that are currently working on domestic violence cases and youth crime cases,” he said.

Even though smoking rates are plummeting, there seems to be a tobacconist in every shopping district. How do they survive when legal cigarette sales are falling? And why are they frequently the target of crime?

After a shop in Preston, Melbourne, was firebombed last November, residents reported seeing suspicious people in and nearby the shop at irregular hours.

“Went into grab some Powerades on a hot day in Feb and old mate behind the counter had a unit of a heavily tatted ‘friend’ sitting near the door watching everyone coming through,” one person wrote on social media.

Ineffective policy

Six years ago, the then treasurer, Scott Morrison, introduced what was called the “Black Economy Package — combating illicit tobacco”.

Assurances from the Federal Treasury the plan would defeat criminals were wrong. The opposite happened.

Excise from tobacco sales peaked the following year, and fell every year since. This year, the tax will raise $9.7 billion, down 40 per cent from 2019-20, when the excise was half as much as today. Tax receipts will fall 27 per cent next financial year, the Budget forecasts.

The figures show the tax is so high it is counterproductive. Instead of making glib comments about lowering the cost of cigarettes, Dr Chalmers would deserve more respect if he acknowledged the problem and worked with the states on a solution.

Before many more tobacconists go up in smoke.