Budget 2018

The Government Is Coming for Your Chop Chop

As well as any other slightly dodgy sources of cheap tobacco you’re relying on due to steep price hikes in recent years.
09 May 2018, 12:41am

The 2018 Federal Budget is here, and on surface level it seems benign enough. For one thing, most people are getting at least a teeny tiny tax break, a feel-good move you might say is explicitly designed to make the Federal Government look more appealing in the lead up to next year’s election.

And yet, as always, there’s fine print: this year’s hefty stack of Budget papers contain buried references to all kinds of new fiscal measures that are far more divisive than tax concessions. A freezing on ABC funding, for example. And an extension of the Centrelink data matching scheme that has seen thousands of Australians saddled with hefty “robo debts” they don’t recall incurring.

Buried even deeper is a plan to crack down on illegal cigarettes. That’s right, the Government is coming for your chop chop, as well as any other slightly dodgy sources of cheap tobacco you’re relying on in the face of steep price hikes in recent years.

The scheme has a catchy title: The Black Economy Package. And its approach to eliminating untaxed tobacco from the Australian market is thorough. Currently, local sellers importing tobacco products from overseas are allowed to store them in licensed warehouses for a period of time before paying tax, but from July 19 that loophole will close and they’ll be forced to pay up at the border.

In other words, boxes of cheap, untaxed cigarettes will no longer go missing from warehouses, and supplies of mysteriously cheap ciggies will dwindle. It will also become harder to import tobacco in the first place, with a stricter tobacco import permit scheme to be introduced in July 2019.

That’s not all. In July this year, the Government will enable the creation of an Illicit Tobacco Task Force, which will target organised tobacco smuggling. According to the Budget papers, this new body will build on the already-strong powers of the Australian Border Force, and its additional capabilities will “enhance intelligence gathering and proactively target, disrupt and prosecute serious and organised crime groups at the centre of the illicit tobacco trade.”

Things are looking a little bleak for big time tobacco smugglers, but what about your local neighbourhood chop chop grower? Also under threat, it would seem. The details are less explicit here, but the Budget does promise that the ATO will be provided with “additional resources to combat domestic tobacco crops” and “ongoing funding to bolster its capabilities to detect and destroy domestically grown illicit tobacco crops.”

Detect and destroy! Some mid-tier public servant is feeling very powerful right now.

It’s estimated that these new measures will raise $3.6 billion over the next four years, which is admittedly a fair chunk of money that would possibly have been scraped from the welfare or tertiary education sectors otherwise. Sadly for smokers, taxing tobacco really is an incredibly effective and easy way to balance the books, and you might recall that the 2016 and 2017 Budgets were cruel to cigarette lovers too.

VICE reported last year that the price of roll-your-own tobacco would increase to match that of tailored cigarettes. And in 2016, the Budget raised the tobacco excise by 12.5 percent.

Cigarette prices will continue to increase at an annual rate: by 2020, it is projected that Australians will be paying $40 per pack. So if there has been a recent increase in illegal tobacco manufacture and consumption then it’s likely due to the fact that cigarette and roll-your-own prices are beginning to exceed what ordinary smokers can afford. It’s worth noting, too, that outdated vaping laws mean smokers have few cheap legal options when it comes to getting that nicotine hit.

In the last financial year, the Government has seized 98 tones of illegal tobacco––which would have been worth $90 million if it had been taxed properly. Speaking to Sky News last week, Finance Minister Mathias Cormann implied that Australians are taking advantage of loopholes to get their hands on cheaper ciggies–––but if he has anything to do with it, they’ll soon be out of options.

“We’re always looking for ways to protect the revenue, we’re always looking for ways... to ensure revenue is paid as it must under our laws,” Cormann said, somewhat robotically.

VICE taste tested the four most popular kinds of shitty homegrown tobacco last year. Although come to think of it, none of them were even remotely good. Maybe this crackdown is actually for the best? Cuban cigars for all.