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$20 a pack: tax slug for smokers - Aust

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  • $20 a pack: tax slug for smokers - Aust

    $20 a pack: tax slug for smokers

    Josh Gordon

    July 5, 2009
    CIGARETTES would cost more than $20 for a packet of 30 and come in plain wrapping if radical proposals now under consideration by the Federal Government are accepted.
    The Government is considering the cigarette tax hike and a ban on all remaining tobacco advertising and sponsorship in response to its yet-to-be-released Preventative Health Taskforce report.
    The landmark report, now being examined by Health Minister Nicola Roxon, urges the Government to slash smoking rates over the next decade to 9 per cent, reducing the number of people aged 14 and over who smoke daily from 3 million to 2 million.
    Under the changes, some of which were canvassed in a discussion paper released late last year, cigarette packets would be generic and plain, with larger graphic health warnings taking up about 90 per cent of the front and 100 per cent of the back.
    Tobacco companies also face a blanket ban on all sponsorship, internet sales, public relations activities and "corporate responsibility" donations.
    The plan has been strongly backed by anti-smoking organisations such the Public Health Association, the Cancer Council and the National Heart Foundation, but has alarmed cigarette companies, which claim it could be unlawful.
    A submission from VicHealth, an independent publicly funded health advisory body, endorsed the cigarette tax jump, involving an immediate price rise of 7.5 cents per cigarette, or 21 per cent per pack, to bring the cost of smoking into line with World Health Organisation standards.
    "Once effective measures are in place to prevent revenue evasion and support smokers unable to quit, we support further increases to ensure that the average price for a packet of 30 cigarettes is not lower than $20," the submission says.
    VicHealth also wants all remaining forms of tobacco advertising, promotion and sponsorship banned within 12 months. VicHealth chief executive Todd Harper said price rises had been proven to significantly curb smoking , with each 10 per cent rise typically leading to a 4 per cent drop in consumption.
    He warned that tobacco companies had become "very adept at exploiting any loopholes", which meant there needed to be a total advertising ban. "As soon as you close down one form of tobacco advertising, we see tobacco (advertising) investment migrate to other areas."
    An initial 7.5-cent excise hike would lift retail prices for a pack of 30 cigarettes from about $13.50 to $16.35. Prices would then rise to $20.15, with the total federal tax take growing by 17.5 cents per cigarette to 42.95 cents under the regime being considered by Ms Roxon.
    A submission by the Cancer Council and the National Heart Foundation to the Government's review of the tax system being undertaken by Treasury Secretary Ken Henry concluded that a 17.5 cent excise increase would raise an extra $1.97 billion worth of federal revenue each year, providing more than enough to fund preventative health programs.
    The price rise would also convince some 306,000 adults to quit and prevent 183,000 children from eventually taking up the habit. "Increased tobacco excise would also generate substantial revenue for government — more than enough to provide effective tobacco control support services and offset declines in excise from relatively fewer people purchasing tobacco products," the submission says.
    Unlike most other developed nations, Australia has not increased tobacco excise and customs duty since 1999, except to cover inflation.
    A submission from tobacco giant Philip Morris claimed that proposed tax increases were excessive and any moves to introduce plain packaging and ban all remaining advertising were unnecessary and could be considered unlawful.
    "It is clear that some of the proposed measures will significantly reduce our ability to compete for a share of the existing adult smoker market, violating competition principles whilst not contributing to public health," the submission said. British American Tobacco has also warned that mandatory plain packaging could breach the constitution.
    A spokeswoman for Ms Roxon said the report of the taskforce, headed by Rob Moodie, was received last Wednesday. Any options for tackling tobacco-related harm would be "closely examined".
    The Victorian Government introduced laws last month that will ban tobacco displays in shops and ban smoking in cars with passengers under the age of 18.

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