Vaping crackdown’s $9bn budget windfall

Modelling shows regulating vapes would deliver about $9.1bn to government coffers, sparking calls for Labor to impose a tobacco-style excise on e-cigarettes.

Illegal vapes with extraordinarily high nicotine content are still freely available in Australia.

A regulatory crackdown on vaping products by the Albanese government would deliver Jim Chalmers a budget windfall of about $9.1bn, new industry modelling has found, sparking calls for Labor to impose a tobacco-style excise on e-cigarettes and stamp out a thriving black market.

A policy costing commissioned by the Australian Association of Convenience Stores found regulating vapes could raise nearly $6bn in excise revenue and over $3bn in GST revenue.

The new modelling comes as Health Minister Mark Butler prepares to introduce new legislation into parliament this week to ban the sale of vapes at convenience stores and other shop fronts.

Despite bans on imports and possession having already been introduced earlier this year, illegal vapes with extraordinarily high nicotine content are still freely available at many convenience stores.

AACS chief executive Theo Foukkare said the regulation of e-cigarettes could give Labor much greater control over vaping.

Mr Foukkare slammed the government’s attempts to ban the product, warning it “has led to over 120 million illegal vapes being sold each year by criminals through the black market who don’t care what they are selling, where they are selling and who they are selling to”.

“As stated in the report, the regulation of e-cigarettes would allow the Australian government much greater control over the vaping market to meet its health policy objectives as well as meeting the fiscal policy goal of maintaining a broadbased tax system that regulates and controls similar adult products such as tobacco,” Mr Foukkare said.

“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.”

Mr Butler said the only groups that were pushing the government to regulate vapes were “those who profit once kids get hooked on nicotine — Big Tobacco and tobacco retailers”.

“I’m not willing to raise the white flag and let a whole new generation get addicted to nicotine,” Mr Butler said.

According to the report prepared by Tulipwood Economics, vapers spent $50 per week on nicotine products or $2600 per year.

Under the model, the government could raise up to $8.187bn in excise duty and $3.172bn in GST by implementing $2 per ml of vape liquid excise which is equivalent to a 22.9 per cent value tax.

However, AACS said an the implementation of a $1.5 per ml of vape liquid excise, equivalent to 17.1 per cent value tax, “strikes the right balance by strictly regulating and taxing vapes without incentivising the black market”.

The opposition has indicated it may oppose Labor’s ban, with Peter Dutton last week flagging he was in favour of taxing, legalising and regulating vapes.

“I think it’s hard to ban it because I think you’ll just see like with the chop shop, the illegal tobacco … people are just buying it in dodgy stores and crime gangs end up profiting from it,” the Opposition Leader told 2Day FM radio last week.

“I think we treat it the same as tobacco is my instinct. I just think when we’ve banned things in the past, alcohol, it doesn’t work.”

Australia is pursuing one of the toughest responses to vaping in the world seeking to become the first country to ban disposable vapes.

The National Health Service in the UK is pushing the use of vapes as a smoking cessation tool while New Zealand has legalised vaping.