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The Cost of Cigarettes in Australia Could Double Over the Next Five Years

The Labor party's proposed tax hike on tobacco will almost double the price of a pack, and fuel the booming cigarette black market.

by Wendy Syfret
Nov 24 2015, 6:00pm

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This week Australia's Labor Party announced that if elected in 2016, they will raise the price of a 25 pack of cigarettes to $40.80 [$30 USD] by 2020. If the hike ever comes into effect, it will mean that when you fork out for a deck, 75 percent of your money will go straight to tax.

According to Cigarette Reporter, which is apparently a thing, Australia already has the most expensive smokes in the world. On average, a pack will set you back $24.69 [$17.84], and come neatly packaged with images of diseased flesh thanks to our tough packaging laws.

But for some, these laws clearly aren't enough. Under the Opposition's plan, they'd roll out four 12.5 percent price hikes between September 2017 and 2020. They claim the policy would double the rates of people quitting, and save the country almost $50 billion [$36 billion USD] in medical costs. On average 15,000 Australian's a year die from smoking-related diseases.

In the past 12 months, tobacco revenue brought in $8.3 billion [$6 billion USD], but the economic and social pressures of smoking cost the country $31.5 billion [$22.7 billion USD].

Despite the grim figures, the suggestion has been met with criticism—and not just from the one in six Australian adults who identify as smokers, or your mate who won't shut up about having to go back to rollies.

Smoking rates in Australia are highest—at about 30 percent—in lower socioeconomic and remote areas. In comparison, wealthy city dwellers have the lowest rate at 10 percent. The economic divide between smokers has led some to suggest that poorer Australians will be unfairly targeted by the tax changes.

Speaking to the Australian Broadcasting Corporation, Labor's health spokeswoman Catherine King acknowledged the gulf between those impacted, saying: "We want people to stop, we want more people to give up, we want more people who are in difficult circumstances to give up as well because we know that smoking kills people." She went on to add that the Opposition would be making further announcements on how they plan to help people quit, but didn't provide specific details.

Tobacco companies seem less concerned about people quitting and more worried about how the ruling could strengthen Australia's black market cigarette trade. Years of high taxes have already created an underground economy of illegally imported smokes. The illegal cigarettes are primarily brought in from Asia, and are popular alternatives for smokers put off by Australia's packaging. Black market cigarettes make up 14.5 percent of all tobacco consumed in Australia.

While retail cigarette sales continue to dip, illegal tobacco sales have increased by 30 percent since 2013. It's estimated that Australia consumed 2.6 million kilograms of illegal tobacco last year.

So while you'll have to wait until next election to know the financial fate of your nicotine addiction, one thing is clear: Australia isn't ready to give up smokes just yet.

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