Treasurer Jim Chalmers Slams Brakes on Calls to Slash Tobacco Taxes Amid Soaring Illegal Sales
- Treasurer Jim Chalmers refuses to cut tobacco taxes despite rising illegal cigarette sales
- Tobacco taxes are up by $441 million, with compliance efforts to be boosted by hundreds of millions of dollars
In a shock move, Treasurer Jim Chalmers has shut down calls to slash tobacco taxes, despite growing concerns over the booming illegal cigarette trade. The Treasurer’s decision comes as he revealed the final budget outcome, which shows a deficit of just under $10 billion for 2024/25 – down from the $28 billion forecasted last financial year.
Speaking in Canberra, Chalmers dismissed the NSW Premier Chris Minns’ proposal to cut the federal excise to deter illegal tobacco sales. “We don’t believe that cutting taxes on tobacco will stop illegal activity in this market that has developed over a longer period of time,” the Treasurer said.
“Compliance is a big part of the story. That’s why we’re finding room for so much new investment in compliance for the police,” Chalmers added, revealing tobacco taxes are up by $441 million.
Minns had argued that the high taxes were driving people who wouldn’t normally break the law to buy illegal tobacco. “They wouldn’t break the law in a million years, but they’re being dragged into a black market where they go to the store, they can either buy a $17 or $20 packet of illegal cigarettes, or a $60 packet of cigarettes,” the NSW Premier said.
Chalmers, however, is convinced that cutting taxes isn’t the answer. “One of [the reasons for the tobacco tax take down] is a good reason – people giving up cigarettes. One of them is a bad reason, which is people getting around the compliance regime,” he said.
The Treasurer also hailed the reduced deficit figure as proof of Labor’s “responsible economic management”. “In dollar terms, this is the biggest-ever positive improvement in the budget in a single parliamentary term. We’ve turned two very big Liberal deficits into two substantial Labor surpluses in our first two years, and now in our third year, we’ve been able to get the deficit much smaller as well,” Chalmers said.
But Liberal Senator Jane Hume slammed the budget outcome, saying it disguised the fact that the improvement was being driven by Australian workers paying more tax. “If you can spin a positive spin on a deficit, well, I’ve got a bit of swampland that I’d like to sell you,” she said.
As the tobacco tax debate rages on, one thing is clear – the government is under pressure to find a solution to the illegal cigarette trade, which is costing the country millions. Will Chalmers’ refusal to budge on tobacco taxes spark a new wave of controversy? Only time will tell.