CANBERRA: Australia’s government rejected the far right One Nation party’s call to slash cigarette taxes in order to reduce prices and cut crime, arguing instead for an intensified struggle against illegal tobacco flooding the country.
"The focus I think needs to be on enforcement,” Assistant Treasurer Daniel Mulino said Wednesday (Aug 19), adding that Canberra will continue to work with state and territory governments to tackle contraband cigarettes.
"It may be that there remains some illegal tobacco in the system,” according to Mulino, who maintains the best approach is "putting more effort into enforcement.” He acknowledged that organized crime is now "entrenched” in the market.
He was responding to a proposal by One Nation leader Pauline Hanson for tobacco taxes to be cut by 75%. Hanson argued in a statement that the current policy "has failed and is now underwriting organized crime,” adding that the government has not only lost revenue but also "lost control of the black market.”
Over the past two decades, Australia has raised cigarette taxes to a level that has made it too expensive for most people to buy legal cigarettes. That’s driven many into the arms of organised crime that offers cheap illegal products.
A pack of 20 cigarettes from a leading brand currently costs up to A$60 (US$42) in Australia, while an illegal version can cost less than half that price.
The exorbitant cost has not only spurred a flood of smuggled cigarettes, but also set off a series of gang wars as the criminal groups that import and sell the products fight each other for control of the lucrative market.
The rise of the illegal trade is eroding the government’s tax take and also undermining health policy, as Australians are now consuming more nicotine. The statistics bureau estimated earlier this year that as much as 80% of all nicotine consumption in Australia last year was illegal. - Bloomberg
