TOBACCO PRICES UP

Evening Star, Issue 25994, 8 January 1947, Page 8

TOBACCO PRICES UP

JOLT FOR AUSTRALIAN SMOKERS STATE SUBSIDY WITHDRAWN TAXPAYER HIT BOTH WAYS (From C. R. Mentiplay, N.Z.P.A. Special Correspondent.) (Rec. 10 a.m.) ' SYDNEY, January 8. Following the recent announcement of an increase in the price of tobacco and cigarettes come authoritative statements to the effect that this is only the first of a series of price jolts to the public. The increase was necessitated, according to the Government, by the withdrawal of the subsidy paid to the manufacturers, producers, or importers to keep down the retail prices. The subsidy system cannot be described as an efficient system of price control, as its benefits are largely illusory. The money paid to the manufacturer by the Government has to be obtained by taxation from the pocket of the consumer. Thus the citizen should be pleased to see the subsidy go if it did not mean an immediate increase in indirect taxation. Authoritative sources state that in the drastic amendment of the system imported articles will be the first affected. Nearly £3,000,000 annually is being paid as a subsidy on impbrted goods, exclusive of a similar amount which helps keep tea prices stable. The loss of the tea subsidy would mean a rise of more than a shilling per lb in the price of tea. With this forecast, and the knowledge gleaned from the Minister of Customs, Senator Courtice, that the Government wants to see the end of the subsidy system, the taxpayer looks Askance at what is happening to tobacco. The common view is voiced by Mr Menzies, Leader of the Federal Opposition, wlio comments: “ It was hoped that the lower price for the subsidised commodity would compensate the taxpayer for the higher tax. When the subsidy is withdrawn up goes the price. The taxpayer expects to have taxation lowered by way of compensation, but that is where he falls in. The tax continues at the same level, and the citizen, as usual, gets it in the neck both ways.” At the same time official figures disclose that the Government expects to receive from Customs and Excise on tobacco and cigarettes £3,000,000 more than last year. The total .gain to the Treasury is £23,750,000 The subsidy paid on tobacco has reached only a few hundred thousand pounds yearly, and this year would have totalled £1,000,000 at the outside. The citizen has official figures to show that at December 31, with half the financial year gone, Customs and Excise revenue was already £2,746,528 above the estimate for the entire year. Press and public alike are at a loss to understand what Mr Menzies describes as “ the thimble and pea aspect of Government finance.” The Sydney ‘ Telegraph ’ says that the increase in tobacco price is illogical, because it does not follow Mr Cliifley’s stated policy of keeping down prices while relieving the taxpayer of burdens immediately this becomes possible. The paper comments that the subsidies should go, hut not at’ tlie price of heavier taxation. With revenue pouring into the Treasury in unprecedented quantities ” Mr Chifley can certainly afford to give us a tax cut of 20 per cent. Why he delays that obviously possible and popular move is hard to understand. Is lie reluctant, perhaps, to prove that Mr Menzies was right when he said that a cut was possible? ”