Cigarette tax causes smokers to cut back on life’s luxuries

KEVIN Rudd’s tobacco tax is hitting small retailers as smokers cut back on magazines, sweets and soft drinks to buy menthol cigarettes.

Shopkeepers say they are paying the price for the Rudd Government’s 25 per cent increase in tobacco excise, which added a average $2.20 to the price of a 30-pack of cigarettes from April 30.

Grocers, newsagents, petrol stations and convenience stores all report seeing little to no drop in the sale of smokes.

But sales of confectionery, magazines, bottled drinks, newspapers, snacks and other discretionary purchases have slumped as the impact of rising interest rates, fuel prices and tighter credit squeezes wallets.

Shoplifting may also rise as a direct result of the cigarette tax, warned the Australian Retailers’ Association (ARA), which is leading a campaign against the federal anti-smoking measures, which includes plain-paper wrappings for all cigarettes from 2012.

Mick Daly, chairman of supermarket group IGA, said: “It is definitely a noticeable effect – people won’t buy the magazine, the chocolate bar, the newspaper they used to buy with their cigarettes, but they are still purchasing tailor-made cigarettes at the same rate.

“They are cutting back on some purchases and trading-down on others. They will either stop buying chocolate biscuits, for example, or move down to a budget brand.”

Retailers – who are also worried about a booming black market in illicit tobacco – are nervously awaiting official confirmation of the trend in official retail-sales figures, due later this year.

Russell Zimmerman of the ARA said shop owners were angry.

He said impulse-buy items, often displayed at counters, accounted for up to 40 per cent of sales at many small retailers. “Smokers won’t go without cigarettes, so other parts of the retail industry are going to suffer,” he said.

Disposable income was already stretched by rising household bills and interest rates, and the cigarette tax had made things worse, said Sheryle Moon, executive director of the Australian Association of Convenience Stores.

“Smokers have to make choices and some of those choices might be that they look for cheaper sources of tobacco, they might access the illicit (tobacco) market and some tobacconists are selling single cigarettes,” Ms Moon said.

Anti-smoking lobbyists insist the tax rise will discourage the habit. “Every time prices go up, there is a significant impact on smoking rates,” said Action on Smoking and Health’s Stafford Sanders.


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