A renowned Australian economist has made a brave call on the tobacco excise.<\/p>\n
Richard Holden, a University of NSW professor and columnist, said the extortionate tax should be dropped to zero for as long as it takes to quash the illegal tobacco trade.<\/p>\n
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He also said reducing the excise simply won\u2019t do and that any future increase should be capped to inflation and start at 50c per ciggie.<\/p>\n
\u201cIf you\u2019ve got to do something, you got to do it until you kick these illegal guys out of the market. If you reduce the excise by a smaller amount that the illegal guys can still compete with then that\u2019s not going to do it. You need to lower it enough that the illegal sellers are uncompetitive and you can only do that by putting the legal guys on a level playing field for a while,\u201d he told news.com.au.<\/p>\n
Mr Holden said he was \u201cskeptical\u201d the government could stamp out illegal tobacco gangs by increasing enforcement alone.<\/p>\n
\u201cThe challenge is there are thousands and thousands of sellers operating in plain sight and the police already don\u2019t have enough resources on hand to deal with them,\u201d he said.<\/p>\n
\u201cYou can close one seller down but another just opens up somewhere else. It just seems like whack-a-mole to me.\u201d<\/p>\n
He also said beefing up enforcment officer numbers was an \u201cexpensive\u201d and precarious task.<\/p>\n
\u201cState police are already short on resources. What is the government going to use, the army? Are you really going to use the army to close down tobacco shops?<\/p>\n
\u201cIt\u2019s very tempting to think in incremental steps but you have to think big and completely change the equilibrium.\u201d<\/p>\n
It comes as damn data recently released by the Australian Bureau of Statistics (ABS) estimates 80 per cent of cigarettes and other nicotine products consumed in Australia last year were illegal, compared to 12 per cent in 2017, contributing to the rapid growth of the black market<\/a>.<\/p>\n It also found nicotine consumption has increased almost 40 per cent between 2017 and 2025, while household spending on legal tobacco dropped dramatically.<\/p>\n Mr Holden also blamed \u201coverzealous public health advocates\u201d and a government \u201caddicted\u201d to excise revenue for the ridiculous rise in tax in his Australian Financial Review <\/a>column.<\/p>\n He said excise on a single cigarette jumped from 26\u00a2 to a whopping $1.53 today. That means the excise on a pack of 20 is more than $30.<\/p>\n The government has doubled down on plans to keep the high excise in place and will increase enforcment officer numbers to crack down on illegal tobacco suppliers.<\/p>\n