The federal opposition's proposal to slash the tobacco excise by 80 per cent is its response to a policy dilemma that pits economics against public health. Driven by a desire to counter a surge in popularity for Pauline Hanson's One Nation, which recently proposed a 75 per cent cut, the Liberal and National parties are positioning this as a silver bullet to destroy the illicit tobacco trade.

Subscribe now for unlimited access.

Login or signup to continue reading

There is no denying the reality of the black market. This dilemma is a classic example of supply and demand - economics 101. Successive Coalition and Labor governments implemented massive tariff increases with the very best of intentions. Smoking is a deadly scourge that adds billions of dollars to national health costs and kills thousands annually.

Tobacco is also one of the most difficult addictions to break, arguably as tough as opiates or crystal methamphetamine. Decades ago, a packet of cigarettes cost just $2. Later, the price rose to $7. Today, by driving the price of a legal packet above $70, governments inadvertently opened the door for organised crime.

Criminal syndicates now generate massive profits by smuggling commercially produced and packaged cigarettes into the country in massive quantities, fuelling a wave of violent turf wars and firebombings across major cities.

However, reducing the excise to make legal cigarettes radically cheaper represents a knee-jerk reaction that essentially waves a white flag over a highly successful public health initiative. Australia was once........

© Canberra Times