Leading public health experts, the Australian Medical Association (AMA), and Labor have rejected the Coalition's plan to cut tobacco excise by 80%, labelling the move to curb soaring illegal cigarette sales as a backward step on tobacco control.
Opposition leader Angus Taylor and Nationals leader Matt Canavan announced plans for an 80% cut to excise, as well as moves to legalise and regulate vapes and nicotine pouches. The announcement comes weeks after One Nation leader Pauline Hanson proposed a 75% cut.
Details of the Coalition's proposal
Taylor said the cut would reduce the excise on a standard packet of 20 cigarettes from about $30 to about $6, arguing it would undermine illicit tobacco dealers, who currently control more than half of all sales in Australia. A Coalition government would spend $200 million on a law enforcement push against illicit sales, with increased funding for the Australian Border Force, federal police, and other agencies.
“You don’t bring organised crime to its knees by protecting its business model,” Taylor said. “You have to destroy the business model, and that’s what the Coalition’s policy will do.”
Taylor said Parliamentary Budget Office modelling found the plan would add about $8 billion in revenue to the budget over four years, including from excise on pouches and vapes.
Health experts and Labor respond
Labor has resisted calls to cut the excise rate, arguing there is no clear price point which would reverse the boom in black market sales. World Health Organisation expert Benn McGrady said WHO recommends governments around the world raise taxes on tobacco products, and prices relative to real incomes, to ensure affordability is reduced over time. Reduced affordability reduces demand, lowering the burden of disease.
“Tobacco taxes are arguably the most effective measure to reduce demand for tobacco products and have played a key role globally in reducing smoking rates,” he said. “From a public health perspective, taxes should be set with the aim of continually reducing affordability and demand. The global experience shows that strong tax administration and law enforcement are important components of tobacco taxation. These require a continued commitment from government and are the most important factor in ensuring compliance.”
AMA president Danielle McMullen said the Coalition’s plan would undermine decades of public health efforts and even drive more Australians back to smoking. “Making cigarettes more affordable is not the answer to tackling the illicit tobacco trade and would undermine Australia’s world leading public health efforts to reduce smoking,” McMullen said.
She said countries including Canada had seen an increase in smoking rates, including among young people, after excise cuts. “Lower cigarette prices would likely increase smoking rates, particularly among price-sensitive groups such as young people and people experiencing socioeconomic disadvantage, widening health inequities.”
Political reactions and support
Labor frontbencher Tanya Plibersek said the Coalition’s plan “will kill people”. “We have some of the lowest smoking rates in the world because cigarettes are expensive,” she said. “Tobacco is the only legal product that regularly kills two thirds of its regular users. If cars killed as many people as tobacco, people would be outraged about the road toll. This is a dangerous product and giving in to the bikies and the organised criminal gangs from overseas is not a solution to the illegal sale of these dangerous products.”
The Coalition’s plan was supported by economist Richard Holden, former deputy chief medical officer Nick Coatsworth, and former Border Force official Rohan Pike. Pike has advised nicotine industry-linked organisations. The trio wrote to Prime Minister Anthony Albanese on Thursday, urging him to adopt the excise cut and warning increased accessibility of illegal cigarettes had undermined tobacco control strategies.
“The illicit market can only be driven out of the country by using overwhelming economic force, by further enhancing law enforcement, and by encouraging our smokers to the safer option of regulated vapes thereby reducing demand for tobacco,” they said.
