05 May 2016
by Inga Ting

Tobacco tax rise comes after cigarette prices soar 343 per cent in 20 years

On Tuesday the federal government announced it will increase the tobacco excise by 12.5 per cent a year for the next four years.

The plan will cause the price of a packet of 25 cigarettes to rise to about $40, up from $25 today.

Bitter though it may be for smokers, the hefty price rise is nothing new.

In the five years to March 2016, the price of tobacco rose by 64 per cent, compared with 51 per cent in the previous five years and 25 per cent in the five years before that.

The rising price of tobacco far outstrips the increases recorded by other consumer goods.

Cigarettes posted the largest price rise among more than 80 consumer items tracked by the Australian Bureau of Statistics' consumer price index.

Tobacco prices rose 1.5 times faster than the cost of insurance (up 206 per cent) and nearly twice as fast as the cost of education (up 183 per cent), which posted the second- and third-largest price increases over the same period.

By contrast, audio, visual and computing equipment such as television sets, cameras and laptops plunged by 91 per cent. The cost of a car dropped by 26 per cent.

Emeritus Professor Simon Chapman from the University of Sydney's School of Public Health said tobacco control had been one of the great public health success stories of our time.

"Tobacco control is the poster child of chronic disease control," he said.

"Tobacco tax is like a vaccine against lung cancer. Price is the single most important factor in determining demand."

Dozens of internal documents from the tobacco industry showed manufacturers were well aware of this, Professor Chapman said.

"That's why they protest about it so much."