Health Policy & Planning 12: Tobacco Taxation in Australia Report

This report examines Australia's health policy and planning regarding tobacco taxation. It analyzes the government's strategy of increasing excise taxes on tobacco products to reduce smoking rates and boost state revenue. The report discusses the rationale behind this policy, citing WHO recommendations and the Australian Ministry of Health's anti-smoking initiatives. It assesses the effectiveness of these measures, considering the challenges of illegal tobacco trade and the impact on smokers. The report provides an overview of the health risks associated with cigarette smoking, including lung cancer, heart disease, and fertility problems. Recommendations for health policy and planning are provided, including alternative approaches such as smokeless tobacco products and electronic nicotine delivery systems. The report concludes by emphasizing the importance of addressing tobacco addiction and promoting healthier lifestyles through effective policies and interventions.

Running head: HEALTH POLICY & PLANNING
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HEALTH POLICY & PLANNING
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

HEALTH POLICY & PLANNING
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)..

HEALTH POLICY & PLANNING
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

HEALTH POLICY & PLANNING
strange coincidence, in most cases, from those countries whose representatives are included
in just the mentioned Anti-Tobacco Coalition plus Belarus.
Cigarettes and taxation
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The number of smokers
The reason is that an expensive pack of cigarettes is successfully replaced by a much
cheaper counterfeit. And every increase in excise duty causes an increase in demand for
illegal tobacco. There is a counting methodology that determines how the volume of illegal
tobacco entering the consumer market increases through all channels depending on the
growth of excise taxes and incomes of the population. If the price of a pack of cigarettes
exceeds eight percent of the daily income level, the consumer begins to switch to cheaper
varieties or to the similar counterfeit that the black market offers. It’s clear which option
should be used (Janda, & Strobl, 2018).

HEALTH POLICY & PLANNING
Worldwide, tobacco products are subject to taxation. The article discusses the features
of the introduction of tobacco excise taxes in terms of their impact on various participants in
the tobacco market. The influence of various tax schemes on the behavior of manufacturers
of tobacco products is analyzed.
Evaluation of challenges between the stakeholders and the government
Stakeholders have vigorously campaigned for a reduction in taxes for cigarette
manufactures. The challenges for manufactures of cigarette is that they are getting shut out of
business due to over-taxation. The sin tax that the Australian government has imposed on
some industries like the alcohol and tobacco industries is crippling their businesses. However,
the government is hearing non-of this argument. The manufactures even threated to close
down some of their factories and sacking some of the employees to push the government
against increased taxation.
Health risks due to Cigarette smoking
Just like any other part of the world, tobacco use or cigarette smoking has long lasting
health implications not only to the person who is using it but also through secondary
inhalations to other people close. Not only does Nicotine bring about health complications
but also additional chemicals used in processing of cigar rete.
In Australia, cancer has drastically increased specifically lung cancer. This was attributed to
excess use of cigarette smoking.
1. Lung damage

HEALTH POLICY & PLANNING
Excessive use of cigarettes affects the lungs. Studies shows that there is 25.7 times increase
in developing lung cancer for women who smoke compared to 25 times greater risk for men
who smoke. CDC reports show that 9 out of the possible 10 cases of lung cancer are linked to
smoking. Australian reports show that smoking causes 80% of COPD deaths.
2. Heart diseases
There has been shown that cigarette smoking actually damages blood vessels, blood cells and
the heart as a whole. Smoking increases the risk of a person having peripheral artery diseases
(PAD) which causes narrowing of blood vessels restricting the flow of blood (Parascandola,
& Bloch, 2016).
3. Fertility problems
Cigarette smoking has been shown to cause decrease in quality of sperm, erectile dysfunction
and can damage the female reproductive system.
4. Pregnancy complication problems
Smoking has been seen to cause pregnancy complications and development of the fetus.
There is a higher risk of ectopic pregnancy and still births.
5. Weakened immune system and vision problems
A weakened immune system makes one susceptible to illness while also impairing a
smoker’s vision.
6. Poor oral hygiene and unhealthy hair and skin
Smokers have a double risk of having a gum disease than a person who does not smoke.
Sensitive teeth and loss of teeth are some of the symptoms of smoking. A person who smokes
may also have prematurely aged and wrinkled skin (Seidel, et al, 2017)..

HEALTH POLICY & PLANNING
7. Risks of other cancers
Nicotine and carbon monoxide among other chemicals associated with tobacco causes, mouth
cancer, throat cancer, liver, colon among other types of cancers.
Adult per capita consumption of cigarette
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q=cigarette+smoking+graphs&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjphP_8vozkA
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Recommendations for Health policy and planning for Tobacco smokers in
Australia

HEALTH POLICY & PLANNING
Besides tobacco taxation, the government can use these extra policies and measures to
reduce cigarette consumption in Australia. In the society of smokers there are many myths
about how to quit. Someone believes that cigarettes with a lower tar content help to “get off”.
However, it has been proven that such cigarettes do not reduce health risks. Someone seeks
help from nicotine replacement (drug) therapy. But smoking is also a psychological
addiction, a behavioral practice that develops a habit. As a result, most fail.
Traditional measures (advertising bans, price increases, and warning labels on packs)
absolutely do not take into account psychology - smokers get used to scary pictures and
quickly forget the recommendations of doctors. Therefore, it is necessary to introduce new
approaches that take into account the real needs and motivation of smokers.
Smokeless tobacco products may be an alternative to reduce the harm from smoking.
They represent a path to less risky nicotine use for those who cannot or do not want to quit
smoking and, for some, to quit (Sharapova, Singh, Kennedy & King, 2018)..
The use of alternative products is much less harmful than smoking. Electronic
nicotine delivery systems (electronic cigarettes and tobacco heating systems) are 90% safer
than regular cigarettes, although partial harm is still present. It is wrong to call such products
a panacea, but the health risks are lower than continuing to smoke. According to a
neuroscientist specialist in the Anti-Smoking Association (Australia), the smoking cessation
process with such products can last up to one year.
Tobacco-related damage and deaths are not only statistics, but tragedy. According to
the World Health Organization, tobacco annually kills 5 million people worldwide (11
thousand people every day).

HEALTH POLICY & PLANNING
Many smokers believe that stopping smoking can make you sick. This is not true, as
giving up the poison is never harmful (World Health Organization, 2017). True, a sharp
change in any regimen, the rejection of a persistent stereotype of behavior in old age is
always difficult, therefore, when a person quits smoking, it is recommended that a doctor
observe.
Conclusion
Many people want to quit smoking because they know that a cigarette kills them. The
evidence base has already been formed, according to which the use of alternative products
can reduce the harm from smoking and placed as government health policy (Xiao, Bai, Chen,
& Wang, 2015). In an attempt to figure out why smokers, knowing about the dangers of
cigarettes, do not give up the habit, the researchers deduced a pattern - only 1% can quit on
their own. The reason for this is addiction. Therefore, drug therapy, even with a high
motivation for refusal, is not suitable for everyone. Government policy should be used to
reduce tobacco intake.

HEALTH POLICY & PLANNING
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