Tulipwood Economics vaping report reveals way to add $9.1bn to government coffers

A “desperately needed” move to change the way vaping products are regulated and taxed would collect billions for the federal government and drive down black market sales, a report suggests.

The federal government would be more than $9bn better off if it overthrew its ban on vapes and products were regulated and taxed in the same way as tobacco, an industry ­report reveals.

Data from Tulipwood Economics state the move would raise almost $6bn in excise revenue and $3bn in GST revenue – and help to dismantle the black market trade.

A $1.50 per ml duty marked on vapes would put $9.1bn into the federal government’s coffers over the next five years.

That would give Victoria an extra $765m in GST revenue.

A report is calling for an overthrow of the vape ban. Picture: iStock

Australian Association of Convenience Stores chief executive Theo Foukkare said market control was “desperately needed”.

“Importantly, this modelling projects that by regulating and taxing vapes, the market’s growth rate will also decrease year over year – given that the number of adult vapers increased by 30 per cent in 2023 to more than 1.7 million,” he said.

Mr Foukkare said the regulation of vaping products would also help dismantle the illegal black market often run by organised crime syndicates.

He called on those at the top to overturn the ban – which was introduced on January 1 and tightened this month – to stop crooks from pocketing huge profits.

There are calls to regulate vaping products to dismantle the illegal black market. Picture: AFP

“Prohibition of a mainstream adult consumer product like alcohol or tobacco in any country has always led to the creation of an out-of-control black market enriching criminals,” Mr Foukkare said.

“The overwhelming driver of Australia’s youth vaping crisis is the Albanese government’s vaping ban, which has led to 120 million illegal vapes being sold each year through the black market by criminals who don’t care what they are selling, where they are selling and who they are selling to.

“Making matters worse is the Health Minister’s decision to promote vapes as a medical product, which sends the ­absolutely worst message to kids that vapes are somehow therapeutic goods.”

The Herald Sun last month revealed that organised crime kingpins had snared a $1bn windfall in just three years, boosted by the explosion of vape sales.

The sale of vapes and illicit tobacco at dodgy smoke shops has left legal stores $800m out of pocket.

But Health Minister Mark Butler’s decision this year to ban the products has so far showed few signs of stopping the use of vapes, with black market operators continuing to control the trade.