How might Big Tobacco react to a rise in cigarette excise?

There now appears to be bipartisan recognition in Australia of the political stench of cigarettes. Labor governments have taken a dim view of smoking for at least a decade, but now even the Liberal Party is joining the attack.

As the campaign donations from the tobacco industry dry up, the Turnbull government has set its sights on a product that, thanks to its unfortunate tendency to kill off its natural constituency, makes for an obvious target. The government is expected to announce a rise in tobacco excise in the coming federal budget.

The current taxation debate is just a small part of a much wider effort to curb smoking rates. And with every successful legislative change in Australia, other nations are increasingly emboldened to take on an industry once considered too politically powerful and dangerous.

Australia’s plain-packaging laws are already viewed as a model for Ireland, the UK and France. Its taxes – among the highest in the world – have routinely been shown to cut smoking rates to historic lows. Its citizens now overwhelmingly accept bans on passive smoking.

Still, Big Tobacco will never give up its fight against regulation and taxes. It knows that for every day it delays change, it saves millions in profits. As such, it relies on tactics of deceit, delay and frustration, which it has developed and refined over half a century.

But it also knows that it can’t make its argument directly. Instead, it relies on rhetorically gifted proxies. To that end, Big Tobacco has collaborated with a global web of friendly lobby groups, researchers and free-market think-tanks, such as the Institute of Public Affairs (IPA). Each proxy is expected to push an agenda, such as suggesting that research on tobacco smoke is “junk science” and critics of tobacco are “biased”.

Once the research has been completed, there are always media outlets willing to dutifully repeat the industry’s claims, which are used to build a narrative of the “nanny” state repeatedly kicking the mature and informed smoker.

Capitalism and freedom – for smokers

In the West, the freedom-of-choice argument has been at the heart of most of Big Tobacco’s campaigns since the 1970s. It’s a powerful idea, but it deliberately ignores the issue of child and passive smoking.

As such, Big Tobacco primarily relies on the argument that the state is trampling on personal liberty. When plain-packaging laws were being debated in Australia in 2010 – the first such laws in the world – the industry and its allies leapt into action.

The resultant advertising campaign was designed to portray the government and anti-smoking campaigners as part of a “nanny state” that was determined to tell adults how to live their lives.

(Stuck in) Nineteen Eighty-Four

The liberty argument may be a legitimate point of debate. But Big Tobacco also contended that plain-packaging laws would fail to deter people from smoking.

The IPA pointed out the tremendous monetary value of packaging, and Australia’s vulnerability to legal challenges that would cost billions of taxpayer dollars.

But, later, a senior IPA member released a study that showed spending on tobacco products had – controlling for other factors – increased following the plain-packaging laws’ passage.

Writers in the Murdoch press reported both stories, unaware of their contradictory nature.

(Big Tobacco’s) crime and punishment

Another line of attack suggests that high taxes on cigarettes cause crime.

In 2015, the tobacco industry commissioned KPMG to study the effects of cigarette taxes on smuggling and black market sales. Unsurprisingly, the report said exactly what the tobacco industry wanted it to – going so far as to suggest that one in seven cigarettes smoked in Australia were smuggled.

As with all industry-funded “research”, government critics were keen to regurgitate the findings.

This is a distraction tactic. It is true that very high taxes, or a prohibition, will create a black market. It is also beside the point of plain packaging – which is to reduce smoking, while allowing for some free choice, provided it is informed and adult. Such laws have proved successful to that end.

The tobacco industry, insisting that we look anywhere but at them, wants to repaint a health issue as a law-enforcement one.

However, the tobacco industry is deeply hypocritical on smuggling. It systematically floods key foreign markets with its product, in turn facilitating smuggling in Western markets. The tactic allows it to claim plain-packaging laws and taxes cause the same crime it creates.

The heart of darkness

Big Tobacco fights in this way because of what it stands to lose.

So, the industry of death continues to exact its toll. It knew that people died from smoking and passive inhalation decades before it conceded the point. It knew of children taking up smoking – it even helped them do so. It complains of smuggling while being the biggest source of the problem.

Big Tobacco does these things because it is afraid. Imagine the profits lost should other countries adopt similar messages. Tens of billions every year are at stake.

In the tobacco wars, the strategic importance of Australia is critical. Big Tobacco will go to extraordinary lengths to ensure moves to quell smoking fail.