Wednesday, 5 September 2012

A remarkable coincidence

Three weeks ago, when I wrote about the imminent implementation of plain packaging in Australia, I quoted a press release from British American Tobacco (BAT) which said:

As there’s no proof that plain packaging will actually work we expect the Federal Government to impose [on] the industry a large excise increase alongside plain packs to try and get more people to quit so it can say ‘look green packs worked’.

Well, guess what?

Tax rise will cost smokers a packet

The price of cigarettes would rise to $20 a pack under a Gillard Government proposal that would reap an extra $1.25 billion a year in taxes.

The West Australian understands the Government is considering a 25 per cent rise in tobacco excise that would raise $5 billion over four years.

Gosh. I wonder when this massive tax rise will come in?

The excise increase may be timed to coincide with the introduction of mandatory plain-packaging for tobacco products on December 1.

To cynical eyes, this could be interpreted as the start of a desperate arse-covering campaign on behalf of a government that knows it has embarked on a plan that is doomed to fail. Some will say it is a shameless attempt to force down the smoking rate in order to justify plain packaging to the rest of the world.

I couldn't possibly comment.

6 comments:

Junican said...

I have said many times that tobacco companies should just pull out of Australia. But I can understand their reluctance. I suspect that they would be very afraid of taking on a GOVERNMENT for fear that it would antagonise other GOVERNMENTS something awful. So what other possibilities are there?
I keep thinking that tobacco industry will come up with some really clever idea, perhaps in conjunction with alcohol, fast food, etc.
Apart from pulling out of Australia (and terminating the supply of tobacco products), there is another possibility, which is to do a reverse nationalisation. Retain the tobacco plantations and processing plants, but pass the whole supply and retailing side to the Australian Government. In other words, announce plainly that they cannot support the retail side any longer, but are prepared to supply to a given government agency as requested - at a price. In that way, they would cease to be tax-gathering organisations; they would cease to be responsible for packaging supplies and distribution and all the VAT, etc, consequences and failures; but they would not be responsible for the shutting of production facilities or for the massive increase in private enterprise supplies.

What seems to me to be of the greatest importance is to find a way to get the Holy Zealots to put up or shut up.

Carl V Phillips said...

The funny thing is that this tactic will also cause a lot more of the other result predicted re plain packaging: black market sales. As I pointed out in EP-ology and you linked to a couple of weeks ago, the new equilibrium optimal tax level will be *lower* with plain packs, so even keeping the tax the same would not be good policy. Raising it is going to have fairly predictable results.

JohnB said...

1.
It just goes on…… and on…… and on…….

Some background on tax on tobacco in Australia.

When the goods & services tax (GST) was introduced, the idea was that all existing taxes would be removed and replaced with a flat 10% GST – except tobacco. Concerning tobacco, all the existing taxes (excise) remained, and then 10% GST applied to all of that too. One government even introduced two automatic price increases per annum for tobacco aligned to the CPI. This spared politicians the embarrassment of having to come before the smoking public each time they hiked prices. But there has been no more rabidly antismoking government than the current Labor government and particularly since they got into to bed with the Greens after the last election. Since then there have been draconian measures galore.

A few years ago, Labor’s Public Health nitwits advised two x 25% increases in excise in quick succession. Labor introduced one of these increases in 2010. In addition to all of the other regular increases in the cost of buying tobacco, that was a massive hike. They know it’s regressive, hitting essentially those of low income. If people are not prepared to quit smoking, it just makes life harder still, further fuels resentment towards government, and further encourages a contraband market.

It must also be remembered that these hikes are typically predicated on the “burden to the health system” argument. Some background:

There was a presentation in the 1980s (see Godber Blueprint) at one of the World Conferences concerning the “cost of smoking” to the health system. There were no studies to that point. The presenter, who was partial to antismoking, concluded that smokers were not an additional cost. He also pointed out that these sorts of studies are highly arguable in that they rely on so many questionable assumptions. Obviously, the fanatics didn’t receive this presentation too well and simply disregarded it. For decades, they have been proclaiming that smoking/smokers are a burden to the health system, even though study after study over that time indicate that it is not true.
Through this fraudulent claim, the fanatics convinced governments to hike tobacco taxes to cover the “extra” medical services. Governments are only too happy to oblige; it means more money in the coffers. And the fanatics always insist that they should be given a cut of the extra taxes to continue “educating” the public, keeping them in comfortable employment. In the last decade, tobacco taxes have been hiked many times into the realm of compounded extortion. So inflated are the taxes that it’s impossible to hide the charade any longer. And it is the poor that typically bear the brunt of these extortionate taxes.

JohnB said...

2
Consider a recent “cost analysis” appearing in an Australian government publication. Net health costs of tobacco-use was estimated at $318,400,000 (p.51). The net revenue from tobacco sales was $6,700,000,000 (p.22). The revenue from tobacco is 21 TIMES the extra cost of treating smokers. Even the extent of this “extra medical cost” is arguable, but we’ll leave that for another time. The difference is obscene.
http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/publishing.nsf/Content/34F55AF632F67B70CA2573F60005D42B/$File/mono64.pdf
Governments and the fanatics that advised them aren’t going to come out and admit that they’ve severely overcharged smokers to the point of repeat robbery and that the tax on tobacco should be considerably reduced. Given that the fantasy that smokers cost the health system can no longer be maintained, the fanatics do what they do regularly – they change the “argument” (storyline), i.e., shift the goalposts. NOW they argue, smokers [way] more than cover their additional health costs, but there are “other costs”. And the above report concocts around $32,000,000,000 of “other costs”. There isn’t time to consider how all these “other costs” are entirely arguable. However, the absurdity of the claims attracted some rare criticism. Further, these “extra costs”, however questionable, are not costs incurred by government and therefore have no relevance to “cost-balancing” exercises by government.
http://www.theage.com.au/national/economists-challenge-healthist-view-of-smoking-alcohol-risks-20111221-1p5nl.html
Shifting the “storyline” or goalposts – lying - keeps the ideological fanatics happy (and they usually call for additional funding to help “educate” the public). And the government is happy because it can claim that it needs to extort even more taxes from smokers. This sort of conduct in other industries – attracting funds on the basis of fraudulent, self-serving claims – would be referred to as a scam or a racket. That these racketeers would be contemplating another of these massive hikes – to steal even more from those who smoke - is beyond despicable.

JohnB said...

Just a note on the Tasmanian situation – the “endgame” proposition – also considerably influenced by the Greens. In addition to its rabid antismoking, the Tasmanian legislature is zealously pro-gay: It is as pro-gay as it is anti-tobacco – both “high priority”. It acts as though the universe’s survival depends on both. Tasmania is bucking the national trend – going it alone – wanting to legalize gay marriage. While it wants to eradicate smoking/smokers from society and as soon as possible, it also wants Tasmania to become a “tourist destination” for gays wanting to marry. This sort of combination has also been seen in California and Bloomberg (formerly known as New York City). New Zealand too, which is also rabidly antismoking, might be considering the “gay tourism” angle. Readers can make of it what they will. But there does appear to be a combination of obsessions.

Consider this latest press conference, particularly noting how the same legislature views those who smoke:
http://au.news.yahoo.com/latest/a/-/latest/14713075/gay-marriage-a-step-closer-in-tasmania/

JohnB said...

For anyone interested, there’s a series of comments on the critical issues of the Hippocratic Oath and iatrogenesis here:
https://cfrankdavis.wordpress.com/2012/09/05/good-riddance/#comment-63996