Australia: Smokers Brace for Another Jump in Tobacco Excise

Source from:  The Sydney Morning Herald  09/01/2014

Cigarette taxes will jump by a hefty 13.7 per cent on Monday, the second of four outsized increases in as many years.

The excise on a pack of 20 will climb from $8.13 to $9.25, an increase of $1.12. The excise on apack of 40 will climb from $16.26 to $18.51.

If fully passed on, it will push the price of a packet of 40 above $30 and push the price of some packets of 20 above $20. The increase means the price of cigarettes for casual smokers will approach $1 a stick.

Labor announced a series of four increases mid-last year, with the first of 12.5 per cent due on December 1 followed by three more on September 1 in each of the following three years.

In addition it changed the method of twice-yearly indexation so that tobacco excise grew in line with wages rather than the slower-growing consumer price index.

The changes were supported by the present Health Minister, Peter Dutton, in opposition and were expected to discourage 200,000 Australians from smoking.

In this year's budget the government revised down its December estimate of tobacco excise revenue by $500million suggesting it expects about 1billion fewer cigarettes to be sold in 2013-14 than it did six months ago.

"The latest increase breaches significant price points," Australian Council on Smoking and Health president Mike Daube said.

"It'll cost $7000 a year to smoke a pack a day.

"We estimate that just as a result of this increase, around 800 million fewer cigarettes will be smoked in Australia and around 60,000 smokers will quit.

"It's also important that the tax increases are accompanying a great deal of publicity about the harms of smoking and measures such as plain packaging."

Treasury data posted on the Health Department's website shows sales slid 3.4 per cent from 2012 to last year. Plain packaging became mandatory on December 1, 2012. Tobacco excise was increased by 12.5 per cent on December 1 last year.

Data collected for the tobacco industry shows consumption remained  flat last year  but recent Bureau of Statistics data points to a slump in the first three months of this year taking consumption to the lowest level on record.

The proportion of the population smoking slid from 15.1 per cent in 2010 to 12.8 per cent this year. Enditem