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Agreement tipped on duty-free tobacco cuts

http://www.theaustralian.com.au/national-affairs/treasury/agreement-tipped-on-duty-free-tobacco-cuts/story-fn59nsif-1226270168623

THE duty-free status of cigarettes for travellers coming into the country is under threat, with both government and opposition reported to be considering proposals to abandon the tax concession.

The Henry Tax Review recommended that people arriving at airports and other points of entry be allowed to bring in only a single packet of cigarettes free of duty.

However, the government declined to include the measure in its initial response to the review.

A report by the Seven Network says the government and the Coalition are now considering abandoning the concession, which costs the budget about $270 million a year.

A carton of 10 packets of 25 Benson & Hedges costs $79.99 at duty-free stores at major airports, compared with a normal retail price of about $160.

Travellers are allowed to bring in 250 cigarettes duty free, or 250g of cigars or tobacco products.

Neither Wayne Swan nor Joe Hockey would comment last night, but the report said Mr Hockey’s savings taskforce had asked Coalition health spokesman Peter Dutton to make a recommendation on the measure, with the Coalition keen to show it is not beholden to “big tobacco”.

A spokesman for the Treasurer said the government would not comment on budget speculation.

The Heart Foundation, which called for the concession to be abolished in its budget submission, last night welcomed the report.

“Stopping duty-free cigarette sales would help to cut the huge death toll caused by smoking in Australia every year, and put an end to what is in effect a government subsidy for the tobacco industry,” said Robert Grenfell, clinical issues director at the Heart Foundation. “If you smoke, you are at least twice as likely to have a heart attack and three times as likely to have a stroke, so the Heart Foundation welcomes any measure that stops people taking up the habit in the first place or helps smokers to quit.

“There is no rational reason to continue the sale of duty-free cigarettes — not only does it cost the government about $200m a year in lost revenue, it undermines their other tobacco control efforts,” Dr Grenfell said.

The Henry report noted that smoking was more prevalent among low-income and disadvantaged people. Twenty-three per cent of people with education to Year 9 smoke, compared with just 11 per cent of people with university education. The government has stepped up its war on smoking since 2010. Then prime minister Kevin Rudd announced a 25 per cent hike in tobacco excise ahead of the 2010 budget, a move that is expected to swell government coffers by a handy $5 billion over four years.

At the same time, he announced the move to tobacco plain packaging, which has led to the government being challenged by cigarette giants Philip Morris, British American Tobacco, Imperial Tobacco and Japan Tobacco International in the High Court and international forums.

Labor has also moved to restrict internet tobacco advertising, preventing retailers from promoting cheap or tax-free cigarettes online.

Singapore is the only major destination that provides no duty-free allowance for tobacco, while Hong Kong allows only one packet.

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