Making the tobacco tax increase work for you

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On 1 September 2019, the excise tax on tobacco products in Australia will increase by 12.5%1,2.That means, if you smoke a pack of 25 cigarettes a day, your spend on cigarettes will increase by $3.27 per day (inc. GST)1*. Over a year, your spend on cigarettes will increase from $13,505 to $14,697.253**. That’s a lot of money going up in smoke. 

What could you do with the money you’d save?  
If the cost of smoking is one of the reasons you’re thinking about quitting, the tax increase could be just the motivation you need to take the first step. Just imagine what you could do with the money you save.

From little treats like an extra coffee a day, to dinner out, or paying off a credit card – putting out your last cigarette will put money back in your pocket. And with the tax due to increase again next year, you’ll be set to save even more. 

What is tobacco tax and why does it keep increasing? 
Excise duty is a tax on tobacco products produced or manufactured in Australia (imported tobacco products are taxed at the same rate too, under ‘the excise equivalent goods tax’)1. This amount is a fixed rate, currently at $0.82 per cigarette stick sold, and will increase to $0.94 from 1 September, 20191. In addition to this, the Goods and Services Tax (GST) is also applied to the total cost, at a rate of 10%.2

There are two main reasons the government imposes a tobacco tax:4

  1. To provide a source of revenue to the government to offset some of the costs cigarette smoking creates. Tobacco use costs the Australian community around $31.5 billion a year5 – mostly in healthcare expenses. 
  2. To help reduce the affordability of tobacco products. Daily smoking rates among Australian adults halved between 1991 and 2016 (from 24% to 12.2%)6, and tobacco tax has been a contributing factor in the decline7. Research from around the world has now shown that tax increases on tobacco products encourage smokers to quit and discourage people, especially the young, from taking up smoking8

From 2017, roll-your-own ('rollies') and other tobacco products like cigars started to be taxed in the same way as manufactured cigarettes3. Applying the same tax to all forms of tobacco is a way to help reduce the motivation for people to substitute cheaper tobacco products for cigarettes.

Take the first step 
So now you have the motivation, you just need the tools to help you quit smoking. This is where your doctor can really help. You could increase your chance of successfully quitting by up to 4x with their help compared with going it alone9. So don't feel that you have to do it all by yourself – start by having a quit chat with your doctor today.

*Excise tax increase is $0.12 per cigarette. Calculations based on a pack of 25 cigarettes.
$2.97 tax increase excluding GST on a 25-pack of cigarettes. $3.27 tax increase on a 25-pack of a cigarettes including 10% GST.
** Calculations based on $37 for a 25-pack of Winfield. Price correct as of March 2019. 

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