A scheduled rise in the tobacco excise means cigarette prices in Australia, already the highest in the developed world, will jump by nearly 7% on Monday. The increase comes amid growing criticisms of the price-led anti-smoking policy, which has triggered an explosion in black market tobacco sales and an associated jump in violent crime.
With the Australian Taxation Office estimating that one-fifth of tobacco sales are now illegal, some experts warn Australia has adopted a 'prohibition-style' approach to tobacco control that is doomed to fail. They argue the excise should be slashed to erode the incentives for illegal trade.
Excise will rise by 6.8% on 1 September: for a pack of 20 cigarettes it will rise from $28.06 to $29.97, or about $1.50 per cigarette. The increase is a mix of a standard twice-yearly indexation that matches growth in earnings, alongside the third of three special annual 5% rises.
Becky Freeman, a health professor at the University of Sydney, said while there could be a case for freezing the excise, the focus should be on cracking down on illegal sales. She pointed towards New South Wales and Victoria introducing tough new laws to combat the widespread sale of illegal smokes and vapes, but said more needed to be done quickly.
Economists have pointed to the collapse in revenue from the excise as evidence that the price-led strategy is not achieving its goals. A near doubling in the smoking tax rate over five years has coincided with a halving in revenue from the tax, from $14.3bn in 2020-21 to an expected $7.1bn this financial year.
The NSW premier, Chris Minns, has joined Victoria's minister in blaming high tobacco prices for a spike in violent crime related to the illicit trade. Minns has previously called for a cut in the excise rate, a step dismissed by Treasurer Jim Chalmers, whose spokesperson said the government wants to see excise revenue fall because more people are giving up smoking, not because of illegal trade.
