Source: The Australian, Wednesday 31 May, 1995, p.4


King-size taxes drag
16¢ out of every cigarette

 
   WHY do governments continue to 
stiff smokers? 
 
   Because they can and because modern 
society's pariahs will apparently even 
cut out "luxuries" such as food to 
maintain their habit. 
 
   Every time they light up, smokers will 
effectively send Messrs Keating, Carr, 
Kennett, Goss, Court, Brown et al 16 
cents. Yes, every single time, every 
cigarette, cough up 16 cents- with the 
States getting the king-size cut. 
 
   According to the Tobacco Institute of 
Australia 64 per cent of the cost of a 
packet of 25 cigarettes goes towards 
State and federal taxes. 
 
   Put another way, that's $4.02 in 
tobacco taxes on the average packet of 
smokes which will now cost $6.29 in 
NSW, Victoria, South Australia, Western 
Australia, Tasmania and the Northern 
Territory. Queensland smokers will pay 
80 cents less per packet than puffers 
elsewhere. 
 
   Breaking down that packet of 
cigarettes, the retailer squeezes out 
$1.04 (16.6 per cent), leaving $1.23 
(19.5 per cent) for the manufacturer, 
distributor and tobacco grower. 
 
   In line with health warnings on 
packets, authorities should warn 
governments that taxing smokers is 
addictive. 
 
   During the 1990s the federal and State 
governments have increasingly relied 
on taxes on tobacco (and less on 
alcohol) to fill their coffers. 
 
   Each year State and federal govern- 
ments collect about $3.6 billion in taxes 
on tobacco, with the States raking in 
about $2.1 billion and the feds taking 
the rest. The TIA expects the total to 
increase to $4 billion in 1995-96. 
 
   After remaining stable during the 
1980s at just under 2 cents now almost 3 
cents of every tax dollar collected comes 
via the beleaguered smoker. 
 
   Following this week's rises in State 
tobacco licence fees from 75 per cent to 
100 per cent of wholesale sales, the 
States will take 65 per cent of the total 
smokers' tax dollar or $2.62 per packet. 
 
   In its Budget earlier this month the 
Keating Government announced a 10 per 
cent increase in the rate of excise on 
tobacco products to $79.02 per 
kilogram, pushing up the average cost 
of a packet of cigarettes by 30 cents (and 
the Federal Government's cut to $1.40 
per packet). 
 
   TIA chief executive officer Mr 
Brendan Brady yesterday said smokers 
and the tobacco industry would take the 
latest tax increase on the chin. 
 
   Despite the tax rises in recent years - 
pushing the so-called "effective" 
tobacco tax rate close to 200 per cent- 
tobacco consumption as a proportion of 
total consumer spending has been at a 
rock-solid 2 per cent during the past 
decade.


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