Australian cigarettes will cost $40 per pack by 2020 thanks to new tax hike

Australian smokers can expect to pay a hefty price to maintain their tobacco-enhanced lifestyle in coming years.  According to new legislation passed by parliament this summer, 25 brands of cigarettes will soar to $40 per pack over the next four years.  The new tax hike will take place gradually at a rate of 12.5 percent each year, or about 50 cents per pack.

Australia already boasts some of the harshest anti-smoking laws in the world. Over the past six years, the country’s smoking population has plummeted to only 13 percent with about 90 percent of these people smoking daily.  By comparison, about 21 percent of American citizens currently smoke either occasionally or daily.

Australia’s drastic decline in recent years is largely attributed to two major factors: The Tobacco Plain Packaging Act of 2011 and two previously successful tax increases on tobacco products implemented in 2010 and 2013.   According to the new legislation, “One of the most effective ways to discourage smoking is to increase the price of cigarettes. 

Australian tobacco taxes: Follow the money

While this latest tobacco tax increase is being marketed as a public health incentive by Australian politicians, the truth of the matter is perhaps slightly less noble.  The original bill was initially introduced by the Labor Party as a way to fill a $20 billion hole in the nation’s financial budget.  And what faster way to generate more revenue while offending the least number of voters than to raise the taxes on tobacco products.  American does this all the time, but we generally go the extra mile and call them “sin taxes.” 

Some of the more reputable economists estimate that the new legislation could raise in excess of $4.7 billion over the next four years.  That’s a pretty massive sum of money, especially when the original budgetary hole was only a small fraction of this amount. Some experts even predict that the price of cigarettes could rise to as high as $45 per pack once inflation and other economic factors are taken into consideration.  Even if the current predictions are accurate, nearly 70 percent of the total cost of a pack of Australian smokes in 2020 will be comprised of government taxes.

(Related Article: Tax dollars at work: CDC says kissing chickens causes disease)

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