The federal opposition's proposal to slash the tobacco excise by 80 per cent is its response to a policy dilemma that pits economics against public health. Driven by a desire to counter a surge in popularity for Pauline Hanson's One Nation, which recently proposed a 75 per cent cut, the Liberal and National parties are positioning this as a silver bullet to destroy the illicit tobacco trade.
There is no denying the reality of the black market. This dilemma is a classic example of supply and demand - economics 101. Successive Coalition and Labor governments implemented massive tariff increases with the very best of intentions. Smoking is a deadly scourge that adds billions of dollars to national health costs and kills thousands annually.
