Plain packaging proves only a burden to retailers as illegal tobacco use continues to rise

ILLEGAL tobacco use in Australia continues to grow with a new report revealing around one in every seven cigarettes consumed is illegal, exposing the fact that plain tobacco packaging has proved only a burden to retailers rather than encourage Australians to quit the habit.

Plain packaging has also lead to a shift from retailers who once regulated sales of legal product to an increasing amount of illegal unregulated sales.

The latest in a series of reports by KPMG LLP in the UK, Illicit Tobacco in Australia, shows that illegal tobacco use in the last 12 months has increased from 13.5% to 14.3% of total consumption.

Australian Retailers Association (ARA) Executive Director Russell Zimmerman said the change to plain packaging has been a waste of retailers’ time and resources.

“According to the report, had that tobacco been sold legally, the Australian Government would have received an additional $1.2 billion in tobacco excise. Instead of paying tax to the Australian Government, criminals are profiting from this illegal tobacco trade at the expense of local law-abiding retailers who could keep tobacco out of the hands of minors.

"The ARA has long argued the change to plain packaging was an unnecessary burden for small to medium retailers, and it is now further evident that this initiative has had absolutely no effect.

“We are very concerned that illegal tobacco products are swamping the market, and this has only been made worse by plain packaging which has seen product move out of well-regulated legal distribution through retailers.

“The ARA will be making the point to the government that action needs to be taken to address the illegal tobacco trade. The government must consider how ever increasing regulation - whether on cigarette packaging or tax - creates additional incentives for tobacco smugglers. It's not only in their best interests but also in the best interests of Australian businesses,” Mr Zimmerman said.

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Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

ENDS