Australia: latest raise of tobacco excise tax

The price of cigarettes raised on 1 September 2018, following an increase of excise taxes by 12.5%. The Government of Australia, in the 2016-17 Budget had foreseen that a series of tobacco excise and excise equivalent customs duty increases be implemented over four years, at 12.5% each year. This tobacco taxation amendment entered into force in the 2017-18 financial year, with annual increases scheduled for each 1 September from 2017 to 2020. The measure is expected to raise $4.7 billion in net revenue by the end of this period.

Tobacco taxation is the most cost-effective measure to control the spread of tobacco use, reducing the demand for these products. Higher prices induce cessation and prevent initiation of tobacco use, especially among the youth. In order to combat the argument that tobacco taxation can increase illicit tobacco trade, the Australian Government introduced stronger penalties for these activities and increase the budget to combat illicit trade, providing extra $7.7 million.

The move made by the Australian Government is in line with the country’s obligations under Article 6 of the WHO FCTC and the related implementation guidelines.