Healthy Policy and Planning Report 2022

Running head: HEALTH POLICY & PLANNING
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Public Health
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Tobacco taxation brings better health and increase state revenue
Executive Summary
This is a national health taxation policy aimed at increasing taxes on tobacco to
reduce addictions and to increase more revenues for the government. The reason is simple -
all over the world the WHO recommendations use this tax as an effective measure to combat
smoking. Australia is no exception. In the spring of this year, the Australian Ministry of
Health adopted an anti-smoking concept, according to which it is expected that increasing
excise taxes on tobacco and an adequate rise in price of cigarettes or cigarettes will most
severely stimulate smokers to give up addiction. This is good from all points of view: people
are encouraged to lead a healthy lifestyle, strengthening the country's labor potential, and the
state budget receives additional funds (in 2017, about 51 billion dollars), which in theory will
also be spent on the benefit of society. However, are these measures so effective?
Excise taxes on tobacco, along with excise taxes on motor vehicle fuel and alcohol, are a
favorite tool of the economic block of the Government of the Australian, guaranteed to
provide a steady increase in revenues to the budget. Moreover, unlike booze and gasoline,
tobacco taxes are growing at a faster rate. As a result, the total collection of tobacco excise
taxes since 1998 has increased three hundred times.
And what about the health of our fellow citizens? Has it improved? Are there fewer smokers?
There is no official data on this, but various kinds of calculations and polls show conflicting
results. In 2012, Australia ranked sixth in the world in the number of smokers, about 30
percent of the adult population was addicted. Moreover, this proportion has not changed

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much since the beginning of the 1990s, when the Government began to actively use tobacco
excise taxes as a means of replenishing the budget.
Introduction
Tobacco consumption has been a major issue in Australia. Studies have shown that
cigarette use is the major cause of cancers affecting people in Australia. The government
wants to have legislative policies that would affect the consumption of tobacco. More than a
quarter of the Australian population are smokers and the government has noted that many
people are getting addicted (Asfar, Ward, & Maziak, 2016). Australia is still in fourth place
in the world in terms of the absolute number of cigarettes consumed, letting China pass
ahead. At the most productive age from 19 to 44 years old, 39.7 percent of Australian citizens
smoke, according to the World Health Organization. At the same time, paradoxically, tobacco
consumption decreased by only 6 percent, and the number of cigarettes sold fell from 346
billion in 2013 to 274 billion in 2016 (as much as 20 percent!) (Cobiac, et al,2015). Such a
disproportion is possible only in one case: official statistics do not take into account the
illegal turnover of tobacco products which are produced in Australia at shadow production
facilities bypassing controlling state bodies or criminally interacting with them. In
neighboring states it is completely legal, but with significantly lower tobacco excise taxes.
However, not at the pace that could be expected based on the growth of tobacco
excise taxes. In fact, since 2012, the volume of tobacco revenues to the budget more than
doubled, excise taxes increased by about three hundred percent, and the number of nicotine
addicts decreased, according to the most optimistic data of the Ministry of Health, by only 10
percent (from 41 to 31 percent of the total population), and for others, including sociological
polls, only by 5-7 percent, and in large cities even a growth of 15-16 percent was recorded
(Contreary, et al,2015)..

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Nevertheless, the Ministry of Finance should plan to increase excise taxes at a faster
pace: in physical terms at 15-20 dollars per pack of cigarettes per year, which significantly
exceeds the expected increase in salaries and real disposable incomes of the population and,
accordingly, stimulates the consumer’s withdrawal to the counterfeit area of tobacco
circulation (DeLong, Chriqui, Leider, & Chaloupka, 2016).
However, all these possible costs are offset by the fact that one way or another the
number of smokers is reduced. And each percent who got rid of tobacco dependence brings
treasury indirect income of about 10-15 billion dollars - medicine costs are reduced, labor
productivity is increased, not counting other undeniable benefits.The essence of the letter is
to, based on the need to combat tobacco smoking, increase through excise taxes the cost of a
pack of cigarettes to the average European level. According to the most conservative
estimates, in this case, unfortunate smokers will have to lay out 250-300 dollars for
cigarettes! Or up to 30 percent of daily income, based on the salary level of 30 thousand
dollars! Recall that increasing the level of accessibility of a pack of cigarettes by a percentage
increases the turnover of the shadow market by four percent, and then an increase of 22
percent (Hu, et al,2016).
Even if we take into account that this proportion will inevitably decrease due to a one-
time gigantic jump in prices, the result can be predicted very gloomy: if the proposal of
public figures from six countries is accepted, the gray and black markets will grow by 40-50
percent. We add that, according to the Federal Customs Service, only in the last year the
number of counterfeit tobacco imported into Australia has doubled. Where are they from? By