Australians hold the honour of sitting in third place just behind Japan, as one of the most expensive locations globally to buy alcohol,tobacco and illegal drugs.
The island nation imposes some of the world’s steepest tobacco taxes – with the average price of a pack of smokes rising to almost $40 AUD in 2018 and more tax-hikes on the horizon.
With a smoking population of approximately 2.5-3 million people, this clearly represents big big-business for the Australian government who have implemented staged tax-increases of 12.5% per annum between 2016 – 2022
There’s just one problem:
Despite the eye-watering levels of ever-increasing taxation, smoking rates throughout the country stagnated and even increased in New South Wales in the year of 2015/16 to accompany this, national cigarette consumption levels rose in 2017 for the first time in a decade.
At the same time, smoking taxes delivered a staggering $8bn AUD to government coffers — not exactly spare change, contributed by one of the singly most discriminated-against groups in society – smokers.
An Unsurprising Black Market
Due to Australia’s unique geography, both in terms of it being an island, meaning it shares no land-borders which are generally porous and thus easy to smuggle through, and in its proximity to South and East Asian locales where cheap cigarettes can be sourced at a fraction of the cost of Australia and easily smuggled out of the source country.
Australian politicians have long ployed the use of increased taxes as a means to lower smoking rates, driving prices sky-high and laying the groundwork for a lucrative black market trade not seen in many other locations.
The black market trade of tobacco has grown further in the past year, reaching a new record high of 15% of the total tobacco market.
Interestingly, research from KPMG indicates that black market tobacco use was actually falling as of 2010, reaching a low of under 12% total use.
However, 2012 saw the introduction of plain-packaging laws combined with the 12.5% annual punitive tax increases, which has firmly increased this share.
Safety Concerns With Counterfeit Cigarettes
Recent tests on counterfeit cigarettes seized by Customs & Border officials has shown the presence of dangerous mould, animal excrement and even asbestos, leading to serious health concerns for smokers who get their tobacco from black market sources.
These counterfeit cigarettes are often made very cheaply in overseas factories that don’t meet the health and safety standards of their original counterparts.
Although it may sound counterintuitive to discuss “health and safety” and cigarettes in the same sentence, hazardous present in manufacturing pose major risks to smokers’ health, including the risk of asbestos-induced mesothelioma.
Regressive Tobacco Taxes Entrench Economic Inequality
It’s no secret that tobacco taxation is regressive – meaning that it is a tax type that falls primarily to the disadvantaged in our society: the mentally ill, Indigenous people, low socio-economic groups, and migrant communities. In other words – a tax on the poor, not the rich.
It’s well known that poor smokers find it harder to quit than their higher-income counterparts, and with almost one in four of the poorest in society classified as smokers, the numbers quickly become relevant.
Smokers Pay Much More Than They Cost
The all-too-commonly overused arguments against smokers is their apparent heavy cost to the health system. “Well why should I have to pay for a smokers bloody heart-attack” they will cry, and this is a seemingly reasonable point… I mean, smokers get sick a lot more often, right?
Well, it would seem this smugness is misplaced – hugely so. In fact, Aussie smokers pay out significantly more than they take out – 17 times as much. This means that despite running at a net gain to the nation, paying not just for their own healthcare, but that of many millions of others too.
The Bottom Line
It’s a shame but also should come as no surprise that the Australian government sees taxation as the best way to reduce smoking rates. After all, the political attitude of Australia towards all things “sin” related has always been to cash in – tax, tax, tax.
In support of this, the government operates not dissimilarly to a cartel – they ban any vices they can’t control outright, herding the masses straight towards the “accepted” sins – Alcohol and tobacco.
This can be most blatantly seen in the heavy restrictions or outright prohibition of nicotine vape products. Despite vaping being classified as at least 95% safer than traditional tobacco products and considered as a useful smoking-cessation aid, state governments have made clear moves to make vaping as difficult as possible, banning it in all outdoor spaces in NSW (at the risk of a $550 fine if caught).
It’s clear to see that the Australian government views smoking not as something they wish to see people stop, but rather as an incredibly lucrative cash-cow, spitting out over 17x what it consumes.
Why kill a sacred cow after all?