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08-November 2013

Plain packaging boosts criminal activity

A KPMG report released today shows that illegal tobacco is a serious issue in Australia. Trade in illegal tobacco is so significant that if the same volume had been purchased legally the Australian government would have raised over $1 billion from the tobacco excise alone.

The report also shows how illegal trade increases every time new, more restrictive policies are implemented.

Demand for cheap counterfeit and contraband cigarettes is accelerating, driven by excise increases on legitimate tobacco.

Three years ago, then prime minister Kevin Rudd announced a 25 per cent increase in tax on cigarettes along with the plain packaging plan, the government convinced the changes would slash tobacco consumption by 6 per cent.

But, based on the survey, smokers have been driven to purchase illicit tobacco products, none of which displays the mandatory health warnings.

This new report highlights the greatest mistaken belief of policymakers, that laws are levers that can be used to carefully manipulate human behaviour. In fact, laws are blunt instruments that often yield ugly results, the illegal tobacco trade is a good example of that.

Further increases in the tobacco excise (as proposed by the previous Labor government) would exacerbate this problem and effectively provide state support to the criminal gangs that operate illegal tobacco importation rings.

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