Dec. 3 (Bloomberg) -- Australians buying cigarettes are now guaranteed to face warnings that include photos of a gangrenous limb and a cancer victim as the world’s first law requiring tobacco sales in uniform packages takes effect.
As of Dec. 1, all cigarettes in Australia must be sold in the uniform packs, with the brand name relegated to the bottom quarter of the package on a drab brown background. The changeover from branded cigarette packs to plain packaging began in October.
“They’re so horrifingly ugly that they are magnificent,” Fiona Sharkie, executive director of anti-smoking campaigner Quit Victoria, said of the new warnings in a phone interview today. Some callers to its hotline said the packaging was the “final push” they needed to stop smoking, she said.
The Australian government faces A$31.5 billion ($33 billion) in annual health costs from smoking, a habit it estimates killed 900,000 of its citizens over six decades. It fended off a challenge from tobacco companies, which lost a bid to block the plain packaging law on Aug. 15 when the High Court of Australia rejected a claim that prohibition of the display of trademarks amounted to an illegal seizure of their property.
The size of the illicit tobacco market in Australia is equivalent to 13.4 percent of the legal industry, Deloitte LLP said in a May report on the cigarette industry.
“This year’s Deloitte report into illegal tobacco found that nearly $1 billion in tobacco excise revenue was lost to organized crime gangs,” Scott McIntyre, a spokesman for British American Tobacco Plc in Australia, said today in an e-mailed statement. “We expect further growth in the black market now that all packs will be easier to copy due to plain packaging.”
Australian Customs and Border Protection seized a shipment of more than 10 million illegal branded-package cigarettes on Nov. 28 as the new law took effect.
Customs officials found the contraband while examining a sea cargo container destined for Sydney, which was said to contain ceramic tiles, according to a statement today from the agency. The shipment represented almost A$4 million in unpaid taxes, the agency said.
Customs and Border spokesman Campbell Massie declined to say which brand the seized cigarettes were.
The Australian government has also toughened punishments for smuggling cigarettes, increasing the maximum penalty to 10 years in jail or a fine equivalent to five times the duty evaded, or both.
BAT makes Dunhill, Pall Mall and Australia’s best-selling cigarette brand, Winfield.
Philip Morris International Inc. is also pursuing the case in international arbitration. The Australian proposal violates a treaty with Hong Kong and may cause billions of dollars in damages, the maker of Marlboro cigarettes said.
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