Australians already pay some of the highest tobacco tax in the world but a pack of cigarettes will become even dearer as the government aims to reduce the number of daily smokers to below 10% of the population by 2025 and below 5% by 2030.
According to data collected by the Cancer Council of Victoria, the cost of a pack of 25 or 30 cigarettes has increased from a few dollars in the early 1990s to well over $40.
Taxes on tobacco are already pegged to rises in the average wage but there will be a further 5% rise a year over the next three years.
National tobacco-specific taxes already make up more than 65% of the retail price of a cigarette in Australia, according to the latest data from the World Health Organization. This is the sixth highest rate in the world.
Experts say increasing the rate of tobacco taxes helped decrease rates of smoking. The rate of daily smokers aged over 15 in Australia has dropped from over 24% in 1991 to just over 11% in 2019. But Prof Paul Ward, from Flinders University, says the tax increases disproportionately affect lower-income earners.
“There is this idea that people are making a choice to smoke and that if we nudge them by increasing taxes, they will make a choice not to smoke,” Ward said. “We just know that that’s not the case.”
People living in the most disadvantaged areas of the country have the highest rates of daily smoking (16%) compared with those in areas of least disadvantage (5.3%).
Until 2010 the Australian government increased the tobacco excise in line with inflation. Tobacco taxes were raised by 25% in April 2010, increasing the cost by about 7 cents a cigarette. The excise continued to rise by 12.5% annually between 2013 and 2020, in addition to increases that matched changes in average earnings.
Emily Banks, a leading tobacco control expert from Australian National University, said it was important to remember these tax increases apply to the whole population and are often effective in reducing overall smoking rates.
But Banks says the statistics often skew the perception. People who smoke are more likely to be unemployed or have a mental illness, for instance, but the majority of smokers are employed and are not mentally ill.
Australia’s high rate of tobacco tax has resulted in some of the costliest cigarettes in the world.
Even as the price of cigarettes has gone up, the amount Australians spend on tobacco has stagnated. Australian households spent $13 a week on average in 2017 – the latest data available. This is the same as it was in 2009. Although these numbers are likely significantly higher among heavy smokers.
“The reasons why they continue to smoke isn’t simply that smoking is addictive,” Ward said. “We [need to] support people to build resilience, so that then when stuff happens in life, that the only recourse to coping isn’t just cigarettes.”
The leader of ANU’s evaluation of the tackling Indigenous smoking program, Raglan Maddox, said there has been “tremendous” declines in smoking in the First Nations population over the past 10 years.
“But we know the burden of tobacco and the tobacco industry cause on Aboriginal Torres Strait Islander people is phenomenal,” Maddox said. “More than one in three Aboriginal and Torres Strait Islander people die from tobacco-related disease and among those 45 and over, it’s one in two.”
He said the tax could work, but most importantly more support was needed – not just from GPs and Quitline but also from the government – and also structural change, for example reducing the number of places people can buy cigarettes.
As a percentage of the retail price of a cigarette, Australia has one of the highest rates of national tobacco-specific tax in the world: 65% in 2020. But countries also impose other levies on tobacco, such as importation or sales taxes, which can change the ranking.
In 2020 a pack of 20 cigarettes was only more expensive than Australia in two other countries – New Zealand and Sri Lanka – according to the WHO, when accounting for differences in exchange rates and the cost of living.
The chart below shows the price of the most popular cigarette brands in each country. The prices are in the US dollars and have been adjusted for purchasing power – differences in earnings and the cost of living across countries.
