Australia’s $40 per pack cigarette tax plans: the need to consider equity

Abstract

In May 2016, the Australian Government announced that it would implement annual increases in tobacco excise of 12.5% up to and including 2020, raising the cost of a pack of cigarettes to $A40. This increase will lead to Australia having one of the highest prices of cigarettes in the world. Increasing the cost of tobacco is considered by public health experts to be one of the most effective strategies to reduce tobacco use, and is generally well supported by the public. However, tobacco tax increases differentially impact various subgroups of the population. Based on a review of existing literature, this paper examines some of the potential (unintended) consequences of the tax to individual and family income; illicit trade; social stigma and opportunities for lobbying by the tobacco industry. In light of these considerations, we offer strategies that might be used by policymakers to mitigate potential harms. While this paper focuses on the impacts primarily on populations in Australia, the consequences and strategies offered may be useful to other countries implementing tobacco excise increases.