Australia poised to force tobacco companies to sell cigarettes in plain packs, a world first

Australia proposes tough cigarette packaging rules

SYDNEY — Tobacco companies would be forced to use plain, logo-free packaging on their cigarettes in a bid to make them less attractive to smokers under legislation introduced Thursday by Australia’s government, which dubbed the move a world-first.

The rules, which would take effect July 1, 2012, would ban tobacco companies from including logos, promotional text or colorful images on cigarette packages. Graphic government health warnings would be prominently displayed instead, with the brand name relegated to tiny, generic font at the bottom.

“The new branding for cigarettes will be the most hard-line regime in the world and cigarette companies will hate it,” Prime Minister Kevin Rudd said.

The government also announced it would increase the cigarette tax by 25 percent, driving up the price of a pack of 30 cigarettes by about 2 Australian dollars and 16 cents ($2). The tax was to go into effect at midnight Thursday.

Tobacco companies immediately blasted the packaging crackdown, and vowed to fight it in court.

“Introducing plain packaging just takes away the ability of a consumer to identify our brand from another brand and that’s of value to us,” Imperial Tobacco Australia spokeswoman Cathie Keogh told Australian Broadcasting Corp. radio, adding the company plans to take legal action.

Retailers said the tax hike would hurt their businesses and bolster the cigarette black market.

“It’s a lazy policy response being pushed by some health advocates,” Mick Daly, National Chairman of Australian supermarket chain IGA, said in a statement. “That amounts to a direct attack on approximately 16 percent of Australians who have made legal and legitimate lifestyle choices.”

Tim Wilson, director of intellectual property and free trade at Australia’s Institute of Public Affairs, said taxpayers could end up paying around AU$3 billion a year in compensation to tobacco companies.

“Under Australia’s constitution, if the government basically takes someone’s property rights including intellectual property such as trademarks, or devalues them to a significant extent, they have to provide compensation,” Wilson said. “I’d be shocked if they didn’t (pursue compensation), because if it happens here, it’ll happen all over the world.”

Opposition leader Tony Abbott dismissed the tax hike as a cash grab, and said he wanted evidence changing the packaging would reduce smoking.

“I’m not in the business of defending smoking, I want to make that absolutely clear. But I also want to make absolutely clear that this is not a health policy — this is a tax grab,” Abbott said.

Australia has banned tobacco ads from print, television and radio for years. The new proposal would also restrict Internet advertising.

Stripping packages of their logos will effectively stamp out tobacco companies’ marketing campaigns, said Rob Moodie, chair of the government’s National Preventative Health Taskforce, which recommended the legislation.

“The thing that tobacco companies fear second after price increases is plain packaging because it takes away their last real avenue for branding their cigarettes,” Moodie said. “It also takes away their in-store presence.”

The prevalence of Australian smokers has dropped from around 24 percent in 1998 to 16.6 percent today, said Moodie, who attributed the drop in part to advertising restrictions, social marketing campaigns highlighting the dangers of smoking and price hikes.