Fed: Retailers pour cold water on Rudd's new smoking tax

AAP General News (Australia)
04-29-2010
Fed: Retailers pour cold water on Rudd's new smoking tax

By Miles Godfrey and Andrew Drummond

SYDNEY, April 29 AAP - The federal government's hardline stance on tobacco has sparked
complaints it will send small businesses up in smoke and lead to a boom in black market
fags.

Retailers have attacked the plans, which see excise duty on tobacco immediately raised
by 25 per cent, adding $2.16 to a pack of 30 cigarettes, and package branding outlawed
from July 2012.

The tax increase will raise an extra $5 billion over four years, to be invested in
the National Health and Hospitals Network under Canberra's new hospitals funding regime.

IGA (Independent Grocers of Australia) chairman Michael Daly was among those who accused
Prime Minister Kevin Rudd of using the announcement to bury a steady stream of bad news.

"(Mr Rudd's) had a bad couple of weeks and this is an obvious attempt to try and divert
attention," he told AAP.

He said it would result in a sharp rise in demand for cheaper cigarettes smuggled in
from overseas.

Under the plans announced on Thursday, tobacco firms will no longer be able to put
logos, brand imagery, colours and promotional text on their products.

The Australian Retailers Association (ARA), National Association of Retail Grocers
of Australia (NARGA), the Service Station Association (SSA), the Convenience and Mixed
Business Association and the Freechoice franchise have all criticised the policy.

"Plain packaging has no demonstrable public health benefits and will lead to unintended
consequences such as an increased use of illegal tobacco," ARA executive director Russell
Zimmerman said in a statement.

The SSA says it will sound the death knell for some independent service stations.

"The increased tax hit will only serve to damage an already fragile industry segment
and accelerate its final demise," a statement from the organisation said.

The tax rise and branding ban comes on top of laws due to prohibit tobacco products
being displayed in shops across the country from 2011.

Opposition Leader Tony Abbott accused the prime minister of a cash grab designed to
balance the books.

Mr Rudd said he anticipated plenty of complaints and said there would be no compensation
for tobacco companies.

"Tobacco companies are going to die in a ditch opposing this sort of packaging," he
told reporters in Sydney.

"The big tobacco companies are going to go out there and whinge, whine, complain, consider
every sort of legal action known to man.

"That's par for the course."

Health groups have applauded the move, saying higher taxation was proven to reduce tobacco harm.

Mr Rudd denied the announcement's timing was due to recent bad news for the Labor government.

The federal government has been forced to shelve its controversial Emissions Trading
Scheme (ETS) and scrap its bungled home insulation scheme in the past fortnight.

Mr Rudd said the tax office had advised him smokers had caught wind of the tax hike
and begun buying up cigarettes ahead of the rise, essentially forcing his hand.

AAP mdg/evt/ash/mn

KEYWORD: TOBACCO RETAILERS WRAP

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