BRISBANE, Australia – Australia’s treasurer Chris Bowen said that the government must “consider all measures” to lower smoking—including an increase in tobacco taxes, The Guardian reports. The government will add $5.25 to a 20-pack of cigarettes, but the increases will be staggered over a four-year period. Overall, tobacco taxes will go up 12.5% starting Dec. 1, to bring in an estimated $5.3 billion to fill in a budget shortfall.
British American Tobacco protested the increase, predicting the current government will be recalled at the next election. “There are over three million poor, old smokers out there who will now have to pay for this government's financial mismanagement,” said Scott McIntyre with BAT Australia in News Corp Australia. “We all know everyone is feeling the pinch currently so these 3 million plus smokers are sure to remember the price hike every time they pull their ciggies out in the lead up to election.”
Of concern to BAT is the likely influx of contraband tobacco products. “We've just seen the Australian Crime Commission two days ago release a report that says organized crime groups see illegal tobacco as a low-risk, high-profit activity. They see it as a market where large profits can be made with minimal detection,” said McIntyre. “Essentially this tax grab hits smokers in the hip pocket while it lines the pockets of organized criminal gangsters.”
Bowen pointed out that the higher tobacco taxes would be in addition to regular indexation. “It provides funds for cancer-related health services; it deters young people from taking up smoking; and of course, it alleviates some of the revenue impacts on the Budget,” he said.
“It might temporarily alleviate a budget hole for the Government but it is not the answer to solving the overarching health related issues,” said Jeff Rogut, CEO of the Australasian Association of Convenience Stores, in a statement. “Meanwhile retailers are on the front line dealing with the negative impacts from these constant tobacco tax hikes as well as the introduction of plain paper packaging.”
Rogut added, “A further increase to tobacco excise will not only drive consumers away from small businesses, but it will stimulate the market for illicit tobacco, leading to a loss of income for legitimate retailers and reduced revenue for the Government.”