Smokers in Australia will be expected to pay more than $45 for a pack of cigarettes by 2020.
The price rise will come as part of a new tax regime planned by the Australian government. It hopes that it will cut down on smoking as well as raising $4.7 billion in tax revenue.
Incremental tax rises on cigarettes from 2017-2020
Australia will reportedly raise the tax on cigarettes each year from 2017. The 12.5% increase will end in 2020, when prices will hit $45 ($33.86 in USD at the current exchange rate).
Some of the increased tax revenue will be used to tackle cigarette smuggling, which the government believes will increase as prices rise. The increase is the latest stage in an aggressive anti-smoking campaign that has been going on for decades in Australia.
Smoking rates have reportedly fallen from 25% of the population in 1993 to under 15% in 2013. In addition to high tax rates the Australian government has strict regulations for cigarette packaging, which sees them sold in plain olive-green boxes with brand names in small print.
Australia pushing ahead with anti-smoking campaign
Instead of attractive packaging the boxes are plastered with health warnings and disturbing images showing the effects of smoking.
John Faulkner, a senator from the left-leaning Labor Party, said the packaging is a good intiative. “If this legislation stops one young Australian from picking up a shiny, colored packet and prevents them becoming addicted to cigarettes then in my view it will have been worthwhile,”he said.
However Scott McIntyre, the spokesman for British American Tobacco Australia, accused the Australian government of taking property, in the form of space on the packaging, from tobacco manufacturers. “The government can’t take away valuable property from a legal company without compensation.We’re a legal company with legal products selling to adults who know the risks of smoking. We’re taking this to the high court because we believe the removal of our valuable intellectual property is unconstitutional,” he said.
Tobacco companies have filed an international lawsuit against the Australian government over its strict packaging laws. Some of the revenue from the higher taxes will be used to pay legal fees.
Worldwide campaign subject to legal challenges from big tobacco
The World Health Organization (WHO) has called on governments to fight tobacco use by banning ads, adding graphic warnings on packaging, raising taxes and fighting smuggling.
“The tobacco epidemic is one of the biggest public health threats the world has ever faced, killing around 6 million people a year. More than 5 million of those deaths are the result of direct tobacco use while more than 600 000 are the result of non-smokers being exposed to second-hand smoke,” said the organization.
A report in Cigarettes Reporter Australians already pay the highest amount per pack for cigarettes in the world. Prices hit $16.11 (U.S.) per pack in June 2015.
In the United States the price of cigarettes varies from state to state. Each state adds their own taxes to the price. According to International Business Times the most expensive place for smokers in the U.S. is New York City. A state excise tax of $4.35 per pack and a city excise tax of $1.60 per pack pushes the price of a pack t over $14.
In contrast a pack in Kentucky has a total tax bill of just $0.60 and costs just $4.96.
The debate over high taxes is set to continue, but it certainly makes sense that governments want to discourage smoking in order to cut medical bills linked to smoking related illnesses.