Government Could Raise $800 Million from E-Cigarette Tax: Report

Government Could Raise $800 Million from E-Cigarette Tax: Report
Regulation of e-cigarettes could generate over $800m for the Australian government, according to a new cost-benefit analysis.

A new cost-benefit analysis has revealed that regulating e-cigarette products in terms of goods and services tax alone could help the government raise over 800 million US dollars in four years.

A report released by Llewellyn Consulting and commissioned by British American Tobacco (BAT) suggests that if e-cigarette products were to be legalized and every one of the 1.1 million Australian adults who use e-cigarettes were to legally purchase their products, it could generate over $200 million in GST revenue annually.

The Chief Executive Officer of the Australian Convenience Store Association (AACS), Theo Foukkare, stated that the report highlights one of the many costs Australia is currently facing due to the prescription-only model for nicotine e-cigarettes.

The loss of 800 million US dollars in GST includes the reduction in business tax revenue, the cost incurred by the prescription model in the healthcare system, as well as losses beyond those caused by adult e-cigarette users being forced to purchase from illegal black markets or unintentionally buying from legitimate retailers.

Despite being illegal in Australia, the prevalence of e-cigarette products is comparable to that of New Zealand, France, and the United Kingdom.

The Australian government must follow the example of New Zealand, the European Union, and the United Kingdom in regulating and controlling the sale of electronic cigarettes as responsible adult consumer products.

The high prevalence of illicit electronic cigarette products has also raised health concerns, as the supply of these products is unregulated and unmonitored, and the government is unable to monitor the ingredients and equipment standards.

A report states that "as observed in many countries that are gradually regulating e-cigarette industries like the UK, France, and New Zealand, a fully legal market can better control product standards and industry compliance.

The Minister of Health, Mark Butler, stated in an interview with The Australian that the Morrison government has abandoned electronic cigarettes. The Labor Party has a proud history of implementing anti-smoking policies and successfully passing plain packaging laws in parliament in 2012. "Our government is concerned about the growing marketing and use of electronic cigarettes, especially among young people," said Butler.

The convenience industry is experiencing a significant decline in foot traffic and impulse purchases, as over 1 million Australian adults are choosing to purchase illegal e-cigarette products from the black market instead of legal retail stores.

Regulating nicotine e-cigarette products as adult consumer goods will allow legal enterprises to sell these products in a lawful and standardized manner.

This will not only support convenience stores that have lost out on trade due to illegal black markets, but also enable the government to regulate this category through product standards, clear labeling requirements, and age identification measures to prevent young people from accessing it.

Foukkare stated that the previous government's prescription model for nicotine e-cigarette products created one of the largest black markets in Australia's history.

Every day, the illegal black market is allowed to run rampant, causing our industry to suffer declines in customer traffic and impulse purchases. Adult consumers are risking their safety by purchasing unregulated products without any standards, while there are no measures in place to prevent young people from accessing them.


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