One Nation pushes steep tobacco tax cut as Australia’s black market debate heats up
Australia’s fight over illegal cigarettes has spilled into tax policy. One Nation leader Pauline Hanson wants to slash the tobacco excise by 75% and freeze
Australia’s fight over illegal cigarettes has spilled into tax policy. One Nation leader Pauline Hanson wants to slash the tobacco excise by 75% and freeze indexation for three years, arguing cheaper legal cigarettes would make the black market less attractive.
The proposal would cut the price of a packet now selling for about A$46.50 to roughly A$21 or A$22, if tobacco companies passed the full tax cut on to smokers. That is the catch. Tobacco companies, not the government, set retail prices, and there is no legal way to force them to hand the saving on.
A cheaper pack, but no guarantee
Hanson says her plan would bring black-market cigarettes closer to the legal price and strip the illicit trade of its edge. One Nation has framed the move as a way to make the black market unprofitable.
But a large excise cut could also become an immediate windfall for cigarette makers. It would do that while leaving the supply networks that feed illegal tobacco largely intact.
Health Minister Mark Butler dismissed the logic earlier today, saying, “Governments aren’t usually in the habit of engaging in price competition with organised crimes.”
Black market pressure is already high
The debate lands as authorities say the illicit trade has grown sharply. The tobacco commissioner says more than half of all tobacco consumed in Australia now comes from the black market, with as much as A$12 billion in tax lost each year.
The federal government has kept to a law-enforcement response. It recently carried out raids on more than 100 retailers suspected of dealing in black-market tobacco.
Health Minister Butler said last year the black market had “exploded” as smokers chased cheaper cigarettes, and that organised crime groups had fuelled a wave of violence, including arson attacks on retailers.
No new idea for Hanson
This is not the first time One Nation has floated a cut. Hanson had earlier proposed a 50% reduction in tobacco tax before lifting the idea to 75% this week.
The move also comes as One Nation faces scrutiny over its broader policy work, including questions about the detail in its migration plan. For now, though, the party is pressing ahead with a bet that lower prices can do what raids and prosecutions have not: squeeze the illicit cigarette trade. Whether companies pass on the tax cut would shape the answer.
