A Shorten Labor Government will build on Labor’s strong record of policy actions to reduce the consumption of tobacco in Australia, by continuing the increase in tobacco excise from 1 July 2017.
Labor will deliver four 12.5 per cent excise rate increases in government commencing on 1 July 2017 which will reduce tobacco consumption while bringing Australia into line with world’s best practice when it comes to taxing cigarettes.
Once fully implemented, our policy will bring us in line with 33 other countries including the UK, France and New Zealand, when it comes to ensuring that at least 75 per cent of the overall cost of a pack of cigarettes comes from taxation.
“Each year in Australia, tobacco kills more than 15,000 people and has more than $31.5 billion in health and economic costs,” said Shadow Minister for Health Catherine King.
“Labor’s approach to tackling tobacco consumption is both evidence-based and in line with international best practice.
“We should be using the tax system for reform with purpose, reforms that will see more people give up smoking, and more kids never start.
“There are 2.5 million Australians who smoke every day – this is too much.
“The World Health Organisation considers that raising tobacco taxes to more than 75 per cent of the retail price for tobacco products is amongst the most effective and cost-effective tobacco control interventions.”
The WHO considers that this represents best practice health policy. Labor’s excise changes once fully implemented will see Australian taxation on cigarettes reach approximately 75 per cent of the retail price.
“Labor believes in a tax system which is fair and promotes jobs and growth, a tax system which focus on encouraging less of the bad things, and more of the good things,” said Shadow Treasurer Chris Bowen.
“Today’s announcement also proves that increasing the GST to 15 per cent and increasing the cost of everything for everyone is not the only option for tax reform.
“We are focused on revenue measures which discourage economically costly things like smoking, which is in stark contrast to the government’s approach which wants to jack up the GST on things like health, education and fresh food to the detriment of the economy.
“Today’s announcement is in addition to Labor’s plans to ensure multinationals pay their fair share of tax and tackling superannuation loopholes for millionaires, both of which raise $21 billion over the next decade.
“The Liberal Government is being dishonest with people: pretending that there is no revenue problem while planning to increase the cost of everything with a huge increase on the GST and putting the GST on essentials like fresh food.
“Labor is being upfront by saying the nation needs more revenue to get back to budget balance and fund important productivity enhancing investments in our schools and hospitals.
“This announcement will contribute to Budget consolidation but will also allow Labor to fund important initiatives in health and other important policy areas.”
Labor’s world leading anti-smoking measures from bans on tobacco advertising to graphic health warnings and plain packaging have seen smoking rates and tobacco consumption plunge over recent years and this measure will ensure smoking rates continue to decline.
“Tobacco consumption has fallen 16.8 per cent in the almost three years since Labor’s plain packaging laws came into effect,” said Ms King.
“According to the latest National Drug Strategy Household Survey, daily smoking declined significantly between 2010 and 2014, from 15.1 per cent to 12.8 per cent.”
The amount of revenue that is collected through tobacco excise (~$8.3 billion in 2014-15) continues to be dwarfed by the $31.5 billion in annual economic and social costs from smoking. And following Labor’s measures, it will continue to amount to less than half this economic and social cost.
The policy has been independently costed by the Parliamentary Budget Office (PBO) to raise $3.8 billion over the current forward estimate period and $47.7 billion over the medium term (the next decade).
When providing its costings, the PBO considered behavioural changes including a reduction in smoking rates that are likely to result from the change in policy.
The PBO costing assumes that more Australians will give up smoking cigarettes when compared to a ‘no policy change’ scenario.
A factsheet of today’s announcement is available at this link.