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2016 Budget | Tobacco company “furious” at treasurer

Cigarettes packed in red paper envelopes The cigarette end or cigarette end is brown and the tip is white and the end of the cigarette or cigarette end extends beyond the package on the white surface.

cigarettes, tobaccoCigarette makers are “furious” the federal government opted to hike taxes on tobacco.

The tobacco excise will rise 12.5 per cent in each year to 2020 which is likely to lift the cost of a packet of cigarettes to $40 or more.

Imperial Tobacco Australia has accused Treasurer Scott Morrison of going back on his word after he smacked Labor for considering a similar plan.

“They’ve now contradicted their own statements entirely. We [are] justifiably furious,” Imperial head of corporate and legal affairs Andrew Gregson said.

Morrison’s budget change will deliver the coalition government an extra $4.7 billion over four years.

Imperial argues the only group that will be happy about it will be organised crime, which already reaps more than $1 billion a year in excise from taxpayers through the sale of under-the-counter tobacco products.

“The government needs to stop treating Australia’s three million plus smokers like second-class citizens and respect their right to make informed choices about what is a legal product,” Gregson said in a statement on Tuesday.

Australia is one of the most regulated countries in the world for smokers.

Imperial Tobacco Australia’s ultimate parent is the UK-headquartered Imperial Brands which sells tobacco products across the world and has interests in logistics.

Australasian Association of Convenience Stores CEO Jeff Rogut said the move is short-sighted, lazy and discriminatory as it will push the tobacco industry to lose excise revenue to criminals. “It’s the opposite of innovation,” he said. “”It punishes honest retailers, supports criminal gangs and hurts low income earners.”

Rogut said “The tobacco excise increases that were insultingly glossed over in the Budget presentation will impact many businesses, particularly the small businesses that the Government claims it is trying to support.

“Legal tobacco represent approximately 37 per cent of a typical convenience store’s sales and for each tobacco product sold, the Government already collects a handsome sum.

“However with endless excise increases the Government is shooting itself in the foot, as the criminals behind the smuggling and sale of illicit tobacco in Australia benefit every time the cost of legal tobacco rises.

“This has made Australia one of the world’s most lucrative markets for illicit tobacco. Of course, the Government collects no excise on the sale of illegal tobacco, missing out on $1.35 billion in lost tax revenue last year alone.”

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