Australia’s plain packaging increases illicit trade and counterfeit cigarettes

From: Pakistan Observer

Naveed Ahmad Khan

Wednesday, July 02, 2014 – AUSTRALIA was the first country in the world to introduce plain packaging legislation, which standardized the packaging of tobacco products by requiring that brand names are only present in a standard font and excluding any other graphic or text elements by which manufacturers can express their brand identity. Since the implementation on December 01, 2012 it is interesting to analyze the experience of plain packaging in Australia and its effects. There are also discussions in other countries about introducing similar legislation of standardized packaging of tobacco products.

A recent KPMG study, Illicit Tobacco in Australia, published in October 2013 found that consumption of tobacco has not decreased since the inception of plain packaging. This was the first time since 2009 that tobacco consumption in Australia did not decline year on year. The level of illicit consumption of tobacco also reached record levels, growing from 11.8% to 13.3% from June 2012 to June 2013, the key driver of this growth being a large increase in the consumption of illegal, branded cigarettes, primarily in the form of contraband. Consumption of counterfeit cigarettes has also increased. If all of this tobacco had been consumed in the legitimate market it would have represented an excise amount payable to Government of AUD 1.0bn at current excise rates.

These results thus show that there is no credible evidence that the far reaching measure of plain packaging would actually work in terms of reducing smoking incidence, but moreover evidence now shows that such measures have serious downsides when it comes to illicit trade of cigarettes. The introduction of plain packaging would involve huge costs for governments in terms of lost taxes and extra investments in the fight against counterfeit tobacco products. Months after the Australian Government’s plain packaging laws came into force, new data was published in the Australian, the respected national newspaper, which showed that tobacco sales increased by 59 million individual cigarettes or roll-your-own equivalents last year. This increase is modest – 0.3 per cent – but goes against a 15.6 per cent fall in tobacco sales over the previous four years. This evidence with the changing consensus opinion in Australia on plain packaging should, at the very least, prompt the other Governments to pause for thought before implementing similar futile legislation.

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