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Labor senators have accused the Coalition of being prepared to let young Australians become addicted to nicotine while taking donations from “big tobacco” in a report used by conservative parties to demand a deep cut to tobacco excise.
In searing dissenting comments for a Senate committee report that its Coalition majority argued for reducing excise on top of tougher policing of illicit cigarette outlets and overturning the ban on vapes, Labor said the opposition wanted to back vested interests’ ability to “flog” more nicotine products.
The Coalition is close to releasing a formal policy that would slash by up to 80 per cent the excise on tobacco, which is now $1.55 a stick. Sales of illicit tobacco have soared since 2020, with organised crime gangs heavily involved in violent acts including firebombings of stores and at least one death.
The illegal trade is also creating huge problems for the federal budget. Since changes were made to how imported tobacco was taxed in 2019, excise revenue on cigarettes has collapsed. By 2030, the total downgrade to tobacco excise is forecast to be $73 billion.
The Coalition is in a fight with One Nation, which wants a 75 per cent cut in excise, arguing that the legal price has to be brought down as close as possible to the illicit price to encourage smokers to avoid the illegal trade.
The Senate committee, led by Coalition senators, backed a deep reduction in excise as well as tougher policing of the nation’s ports, a major public health campaign, and the creation of cigarette packaging that can be traced by legal authorities.
The Coalition senators said in the committee’s report that the growth of illicit tobacco trade was a historic public health policy that was also a threat to national security and the Australian economy.
“To avoid the total collapse of the lawful tobacco market and the entrenchment of a black market monopoly, wide-ranging policy changes are urgently required,” they said.
But Labor senators Jana Stewart and Dorinda Cox lambasted the Coalition’s majority report, saying it had failed to back up its claims while ignoring evidence from around the world that low rates of excise co-exist with large illicit tobacco sales.
They said overturning Labor’s ban on vapes would just create a “gateway drug” that would be exploited by organised criminals just as they had come to dominate the illicit tobacco trade.
“The Coalition’s goal is to benefit big tobacco and those with a vested interest in flogging more nicotine to Australians,” they said.
“The proposal to ‘let vapes rip’ and open Australia to all manner of harmful nicotine products would only benefit big tobacco and other nicotine sellers who profit from this trade.
“While mysteries will always remain, Labor senators observe that while the Labor Party does not take donations from big tobacco, the same can’t be said of the Coalition.”
The Nationals are the only major party to continue to accept donations from the tobacco industry.
Labor left open the door to a reduction in tobacco excise, but it would have to form part of extra enforcement actions while expressing deep scepticism a cut in taxes would end the illegal trade.
Both Labor and Greens slammed the Coalition for allowing representatives from Philip Morris to give confidential evidence to the inquiry, noting no cigarette company had guaranteed it would reduce prices if excise was cut.
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Shane Wright is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X or email.From our partners
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