Tax blitz on black market vaping industry could deliver $800million boost to the budget

Australia’s black-market vaping industry has been warned it faces a difficult future amid plans to crack down on it for health reasons and a new report that wants it to be taxed like cigarettes.

The report, commissioned by British American Tobacco (BAT), recommends that e-cigarettes be taxed as tobacco products, which would bring in about $800 million in four years through GST alone.

Health Minister Mark Butler said Morrison’s government “dropped the ball” on vaping, leading to a huge surge in use.

“The number of young Australians aged 18-24 who reported using e-cigarettes has almost doubled, from 2.8 percent in 2016 to 5.3 percent in 2019,” he told the Daily Mail Australia.

About 1.1 million Australians use vapor products, which is expected to continue to rise.

Existing legislation allows people to import vaping products after consulting a doctor, but that accounts for a very small proportion of vapers.

Most of the use of vaping products in Australia comes from illegal purchases made online and in corner shops.

In 2020, then-Health Secretary Greg Hunt was forced by opposition from coalition MPs to drop plans to impose fines of $200,000 on importers of non-prescription nicotine vaping products.

UK-based Llewellyn Consulting’s report on legalizing vaping products said: a tobacco-style excise tax would bring billions to the budget if new rules are imposed to wipe out the black market industry.

‘These illegal markets have grown enormously. In doing so, they deprive both the government and the legal market parties – including the retail sector – income,” according to the report.

Vapor levels in Australia are comparable to those in New Zealand, Great Britain and France, where products are legal and regulated.

The Albanian government is more likely to crack down on the black market for vaping on health grounds than to take advice from a tobacco company’s report.

Mr Butler said Labor has a ‘proud history’ of anti-smoking policies – it passed the world’s first ordinary packaging laws in 2012.

“Our government is concerned about the increased marketing and use of e-cigarettes, especially among young people,” he said.

Tobacco taxes in Australia are among the highest in the world, with the federal government raising $13 billion, or 2.5 percent of the total tax, from tobacco excise revenues in the past fiscal year.

As more people switch to vaping or quitting smoking in recent years, government revenue from tobacco taxes has fallen by billions of dollars.

The BAT report said: “Continuing to raise tobacco excise tax rates through wage inflation, as currently enshrined in law, coupled with legalizing the sale of nicotine vaping products would be the most likely avenue to cut government tax revenues.” optimize.’

It added that regulation would also “slow down the growth of illicit tobacco consumption and bring large and growing sales of illicit vaping products onto the legal net”.

In June, the National Health and Medical Research Council warned about the dangers of e-cigarettes.

The review of the evidence surrounding the technology found that the vapor from e-cigarettes could be ‘clearly’ harmful with ‘limited evidence’ that vaping was effective in helping smokers quit.

Mr Butler recently chaired the inaugural Tobacco Control Roundtable, which discussed better options to tackle the marketing and use of e-cigarettes, especially among young people.

“The government is working with the states and territories to strengthen the regulatory framework for e-cigarettes and vaping products,” he said.