Submission by Imperial Tobacco Australia Limited (PDF 600 KB)

More documents

Recommendations

Info

differs significantly from the approach of regulators in other markets, such as the US FDA, which has adopted an approach more focused on “harm reduction” and acknowledges that informed adults may want to continue to use tobacco products. We believe that the decision to enjoy tobacco products is a choice for adults and support the right of adults to choose to smoke. We do not want children to smoke or to use tobacco products. We support penalties for retailers who sell tobacco products to children. 3 PARTS 6.1, 6.3 AND 6.4 Priority Areas 1 (Strengthening Social Marketing Campaigns Etc); 3 (Bolstering and Building On Existing Programs and Partnerships to Reduce Smoking Rates Among Aboriginal And Torres Strait Islander People); and 4 (Strengthening Efforts To Reduce Smoking Among People In Disadvantaged Populations With High Smoking Prevalence) We recognise that it is the role of government to provide the public with clear and consistent messages about the health risks associated with smoking. We support government efforts to inform people of these risks provided that government policy is supported by sound evidence. We oppose any government campaigns aimed at stigmatising smokers or harassing them into quitting. We believe that such campaigns are counterproductive, making smokers feel victimised by and alienated from the government, and accordingly, less receptive to government health warnings. We support government campaigns that focus on the factual statements relating to the risks associated with smoking in order to enable informed choice by adults, rather than campaigns that seek to impose a view about socially appropriate behaviour and attempt to mould social norms. Several of these action areas propose to monitor, analyse and evaluate the impact of current and/or future initiatives to inform and refine future regulation. We strongly support efforts to evaluate regulation against evidence-based data. We continue to seek constructive dialogue with regulatory authorities in order to support reasonable, proportionate and evidence-based regulations and would like to be involved in establishing any relevant frameworks. 4 PART 6.2 Priority Area 2: Continuing to Reduce the Affordability of Tobacco Products We note that tobacco products are already subject to taxes much higher than those imposed on any other consumer products. While the consultation paper claims that high taxes reduce smoking levels (p 17), there is little evidence to show any direct causal link between high taxes as an isolated factor and reduced prevalence of smoking. We submit that a more likely explanation for any causal link is that high taxes reduce sales of legal products and cause consumers to substitute legal tobacco for illegal alternatives. The consultation paper asserts that „Australia has successfully prevented the emergence of widespread illicit trade in tobacco as has occurred in some other countries‟. Given the 2
figures set out below, ITA would challenge the accuracy of this statement. Importantly, the consultation paper also notes that „continued effort is required to prevent an increase in the availability and use of illicit tobacco products …‟, acknowledging concern that higher prices may lead consumers to substitute legal products with illegal ones. There is strong evidence to support the view that there is a direct causal link between increases in tobacco prices and increases in illicit trade in tobacco. This is due predominantly to the fact that duty and/or excise are not paid on illicit tobacco products, making them less than half the price of legal products. A recent report prepared by Deloitte states: „The illicit tobacco market in Australia for 2011 is estimated to total 2.264 million kilograms of tobacco which is equivalent to 13.4% of the estimated legal tobacco market … The proportion of survey respondents who reported purchasing illicit tobacco has increased since 2010.‟ Deloitte‟s tracking of illicit tobacco trade between 2009 and 2012 shows that after a significant tobacco excise increase (25%) in 2010 there was a statistically significant spike in illicit trade. Subsequently, engagement in illicit trade has slowly stabilised, correlating with a stabilisation of prices for legal tobacco. ITA fears that another sharp increase in tobacco excise would result in another spike in the number of consumers who substitute legal, properly regulated, tobacco products for contraband, counterfeit or unbranded (loose) tobacco products. The illicit trade in tobacco significantly undermines a number of public health initiatives relating to smoking. First, illicit tobacco products have not been manufactured in a regulated environment, may contain unknown substances and otherwise not comply with Australian manufacturing requirements (such as Reduced Fire Risk compliance). Second, the levels of tar, nicotine and other ingredients in cigarettes sold on the black market are not subject to government regulation or scientific scrutiny. Third, pushing consumers towards illicit trade exposes them to criminal groups who demonstrate no regard for public safety and health, rather than encouraging consumers to engage with responsible manufacturers and retailers. Anecdotal evidence suggests that criminal groups often supply tobacco to children, who may not represent a profitable market for illicit trade without the additional adult demand for black market tobacco products. In short, criminals involved in the manufacture and supply of illicit tobacco products are unaccountable for their products and their activities, engaging in a range of conduct that is directly conflicting with the public interest. Any further increase in excise tax would undermine the work undertaken by the industry, business groups and government authorities to combat illicit trade in tobacco products. Finally, the illicit trade in tobacco products also undermines the government‟s revenue raising capabilities as taxes cannot be collected from illegal sellers of cigarettes. Approximately $1 billion in revenue is lost annually as a result of the tobacco black market and the livelihoods of many small businesses are put at risk. The above Deloitte report also demonstrates that consumers have a high level of awareness of the availability of cheap illicit products. The consultation paper acknowledges that „[i]n 2010, nearly half of smokers aged 14 years or older had seen or heard of unbranded loose tobacco known as “chop chop”.‟ The awareness of these products, and their continued availability, makes the potential for consumers to move to illicit tobacco as a result of sharp tax increases greater. ITA submits that the government should be concerned particularly about low income consumers feeling pressure to substitute expensive legal products with comparatively inexpensive illegal products. Lower income consumers have higher price elasticity than higher income consumers. The consultation paper acknowledges this by stating that „[o]ver the period January 1999 to 3
Page 1: SUBMISSION MADE BY IMPERIAL TOBACCO
Page 5 and 6: The imposition of minimum pricing w
Page 7 and 8: disclosure requirements would invol
Page 9 and 10: 5.5 Action Item 6.5.11 ITA does not
Page 11 and 12: PART 6.7 Priority Area 7: Reducing

Submission by Imperial Tobacco Australia Limited (PDF 600 KB)

Create successful ePaper yourself

Delete template?

Save as template?