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Abolishing duty-free tobacco sales and setting a minimum floor price

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Cancer Council Australia calls on the next Australian government to remove existing avenues for acquiring low cost cigarettes which may negate the public health benefits of increases in tobacco excise by:

 

• abolishing duty-free tobacco sales at Australian airports;
• setting a minimum floor price for tobacco.

Smoking is the leading cause of cancer in Australia. ¹ More than 11,300 new cancer cases and nearly 3.500 cancer deaths were attributed to smoking in Australia in 2005. ²The impact of smoking is not limited to cancer. Each year around 15,500 Australians die from smoking-caused diseases, more than by breast cancer, AIDS, traffic and other accidents, murders and suicides combined. ³ The total social cost of smoking in Australia has been estimated at $31.5 billion a year. ⁴

With almost one in five Australians smoking every day, tobacco use will continue to impose a huge yet potentially avoidable burden on Australia’s economy. Price control is the most effective measure available to government to reduce the economic and social costs of smoking. ⁵ However the continuing availability of duty-free tobacco at Australian airports and the potential for retail price cutting and importation of cheap cigarettes continues to compromise the public health benefits of recent increases in tobacco excise.

Abolishing duty-free tobacco sales in Australian exports

The continued availability of duty-free tobacco products at Australian airports is a conspicuous hole in an increasingly tight national tobacco control policy response. As well as costing around $200 million in lost annual revenue (as estimated in the “Henry” review of taxation), ⁶ Australia’s continued provision of duty free tobacco promotes smoking and flouts our obligations under the WHO Framework Convention on Tobacco Control. ⁷ The “Henry” review makes a clear case (recommendation 75): “There should be no duty free allowance on tobacco for international travellers entering Australia”.

The next Australian government should support this recommendation, to further de-normalise smoking. Australia’s most lethal and unregulated common consumer item should not be available in heavily discounted form to encourage bulk purchasing and excise avoidance.

There are no legal barriers preventing the Australian Government from banning the sale of tax- and duty-free tobacco products in Australia. In addition obligations under current international agreements would not prevent Australia from introducing laws banning international travellers from bringing tax- and duty-free tobacco products into the country, provided that the laws were introduced on public health grounds.(source: Taskforce report)

Setting a floor price on tobacco products

Australia urgently requires a mechanism to ensure there are no loopholes for retailers to reduce tobacco product prices in a way that will negate the public health benefits of minimum increases in tobacco excise. The Government’s published estimates of the benefits of its 25% increase in excise announced in the 2010-11 budget were based on a standard 25-pack costing $15.

Legislation to set a minimum floor price at $15 (depending on pack size, and with incremental increases) will prevent the availability of low-cost cigarettes from undermining the health benefits of tobacco excise.

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This page was last updated on: Tuesday, August 7, 2012