By Kevin Glancy

In a recent Senate Estimates hearing it was announced that the government-owned Future Fund had invested $221 million in 15 tobacco companies. The most recent investment was the purchase of tobacco stock in May 2012 in the Czech Republic division of Philip Morris.

Now something doesn’t make sense. This is the same Labor government that recently introduced plain packaging laws without any global evidence that such a strategy will work and by doing so, created a dangerous precedent by interfering with a private company’s packaging of (like it or not) what is still a legally manufactured product rather than choosing to simply ban the stuff.

Of course addicts don’t care what their preferred poison is wrapped up in, you could put cigarettes in a brown paper bag and all it would do is make young people even more curious and tempted by the contents. Hiding them from view in retailers could also have a similar effect as young people tend to be attracted to things they are told they can’t have – particularly, ‘illegal’ things hidden from view.

I speak with a certain amount of experience on this issue. As a youngster, my late father, who wasn’t averse to beating the living daylights out of his children on a regular if not daily basis, threatened that if he caught me with a cigarette that he would kill me. In hindsight I would have much preferred that he had jammed a cigarette in my mouth which would have induced instant coughing and spluttering followed by fainting.

This would have removed the desire on my part to further indulge and reduce the curiosity and the temptation heading my way due to peer group pressure. Alas! This he didn’t do and even with the threat of death hanging over my head, my curiosity was still aroused. At the first opportunity I bought a packet of 6 Woodbines, snuck behind the garage when he wasn’t home and off I went onto the land of the addicted smoker and ironically, the consumption of poisonous chemicals with the potential to bring about my death in any event.

Labor, like previous Liberal governments has a love-hate relationship with smokers. They love the fact that they can tax them to the hilt to make up for their own financial waste and yet supposedly hate the dreadful smoking habit.

If all smokers who are by far, the highest taxed individuals in this country quit tomorrow the loss of multi-billion dollar revenue would have to be found somewhere else. For those non-smokers who delight in these prohibitive measures beware – your preferred poison will be next. Through their general apathy, Australians have provided a license for governments to increase taxes on anything that they deem is bad for us.

What legal product will be next? Will it be yours? Alcohol, junk food/obesity related products or a whopping crash tax on cars along with mandatory pictures of crash victims adorning the sides? How about pictures of exploding livers on wine bottles? How about labels on perfume bottles stating that this product could cause breathing difficulties for others in elevators and confined spaces?

For many years the high taxing regime on smokers has been full-on yet governments do not reduce taxes on quit-smoking aids to make them cheaper. So the question must be asked; do they really want smokers to quit?

Kevin Rudd exercised his love for smokers in 2010 when as Prime Minister he raised an extra $1.3 billion with a 25% increase in tobacco tax. We’re told that these measures are for our own good and without appearing to defend the indefensible in terms of this dreadful habit, do these measures actually work?

In the year 2000 it was estimated that there were 3.3 million smokers in Australia and in reality, any reduction regardless of the prevailing propaganda since then, is relatively marginal despite all these tough measures. On recent available estimates that figure is still around 3 million.

The Labor government obviously knows this because why else would they allow the investment of $221 million in tobacco?

Here we have the government on the one hand, wanting us all to believe that its policies are designed to cut down the sale of tobacco and yet on the other, it’s investing in tobacco sales to make a profit. Either they’re idiots throwing away our money or it’s an investment strategy which must surely be based on a belief that tobacco is a growth industry and such an investment will be rewarding. So who’s fooling who?

Again Labor’s reign of hypocrisy and doubles standards prevail.

The habit of tobacco consumption cannot be defended but it is an addiction and not one on which to make a profit at smokers’ expense.

Smokers already pay well in excess of the cost of health related problems despite the prevailing propaganda and the fictitious figure of $30 billion regularly bandied about. It’s a figure that includes all cancer treatment regardless of how it is caused.

If only it was that simple – that smoking is the only cause. Yes it certainly can cause cancer and most definitely emphysema but there are also many other factors involved in this scourge. However, the billions of dollars in taxes paid by smokers over the last twenty years or so should have gone a long way into building the perfect health system or finding a cure for cancer so that the greater community could also benefit by the smoker’s costly addiction.

 

Poor who bear brunt of ‘nanny taxes

Adam Creighton, Economics correspondent for The Australian newspaper had this to say in an article on April 26^th last year when he highlighted that it is those on the lower socio-economic scale who are hit the hardest by such things as high taxes on smoking.

I repeat his article here courtesy of The Australian; www.theaustralian.com.au

By Adam Creighton

AUSTRALIA’S poorest households are being increasingly punished for their choices as the government’s “nanny tax” haul surges past a record $13 billion.

Analysis from the Institute of Public Affairs, to be released today, shows taxes on alcohol, tobacco and processed food amounted to $13.1bn last financial year, making up 4.7 per cent of government revenue, a 15 per cent increase from four years earlier.

Nanny taxes, such as tobacco excise, are designed to dissuade people from buying particular goods. The report’s author, IPA research fellow Julie Novak, told The Australian the nanny tax take next financial year would surpass the projected revenue from the carbon tax and the mining tax combined, which were expected to raise about $11bn in 2012-13.

“Not only is the revenue haul from nanny taxes larger, but their burden falls heavily on the poor,” Ms Novak said.

The poorest 20 per cent of households, which are facing annual price hikes of up to 10 per cent for education, health and childcare expenses, pay about three times as much in nanny state taxes proportionally to their disposable income as those in the top 20 per cent, the report finds.

Families in the bottom fifth of the income distribution pay about $26 a week in nanny taxes, or almost 7 per cent of their disposable income. The richest fifth, however, pay a 2.6 per cent nanny tax rate, or about $46 a week. Although wealthier households pay greater sums of tax on alcohol and processed food, they pay $1.50 a week less in tobacco tax because smoking is more popular among poorer people. “It is astonishing that groups like the Australian Council of Social Services, whose mission it is to defend the poor, pay little attention to the burden of nanny taxes on the poor,” Ms Novak said.

An ACOSS spokesman said the effect of alcohol and tobacco taxes on the poor was “not an area we do much work in”.

Taxes on tobacco increased significantly when the Rudd government lifted tobacco excise by 25 per cent in 2010, raising an extra $1.3bn a year. They now make up more than half the nanny tax total. The government also increased tax on flavoured alcoholic drinks, “alcopops”, by 70 per cent in April 2008, which increased alcohol excise by about $800 million a year. Ms Novak, who has worked at the commonwealth Treasury and the Productivity Commission, said that the Gillard government was likely to increase nanny state taxes “in a quick grab for revenue” as it tries to deliver its promised surplus in 2012-13.

As The Australian reported last week, the Distilled Spirits Industry Council of Australia is arguing for increases in tax on cider. In a pre-budget submission it shows the government could net a further $500m over four years if it increased tax on plain apple and pear cider, which are currently taxed more leniently than flavoured ciders.

While processed food does not attract a specific excise or tax, Ms Novak argues the GST functions like a nanny state tax to the extent it is levied on food. She said the Democrats’ support for the GST, which the Howard government needed to introduce the tax in 2000, was secured only once it imposed a relative penalty on “junk” food. Fresh food was excluded, which then Democrats leader Meg Lees said served public health interests.

Last year the Australian Greens proposed taxing junk food following Denmark’s introduction last year of a surcharge on foods with excessive fat content, a tax British Prime Minister David Cameron also suggested should be adopted.

In Australia, the National Preventative Health Taskforce recommended in 2009 “tax incentives” be used “to promote production, access to and consumption of healthier foods”.

Ms Novak estimates a 20 per cent ad valorem tax on takeaway meals and fast food “which would punish time-poor consumers”, would raise an additional $268m a year, of which low-income households would pay $39m.