Right: Anti-smoking organisations point to surveys showing there are over 100,000 children who are weekly smokers. This, they say, is a good reason for increasing the tax on cigarettes, so as to put them out of the financial reach of minors.
Arguments in favour of taxing cigarettes more heavily
1. Increasing the tax on cigarettes will promote public health
Cigarette smoking has been shown to pose a major risk to health. Any action that reduces the number of people who begin or continue to smoke will help to advance their health.
The Prime Minister, Mr Rudd, has stated, 'Around 30 per cent of cancer is caused by tobacco consumption and it's estimated this will kill 15,000 Australians each year. That is far too many and it's also really expensive for the country to deal with. We need to get serious on this major driver of cancer in Australia.'
The federal treasurer, Chris Bowen, has also stated, 'We all know that far too many people die from cancer in Australia.
There are 16 types of cancer caused by smoking, and every Australian family I think would have been touched by one of those cancers caused by smoking.'
Health groups like the Australian Medical Association, the Cancer Council, Quit Victoria and the National Heart Foundation praised the measure, saying it would save lives.
The Cancer Council and the Heart Foundation have stated, 'Smoking is responsible for 20.1% of the disease burden due to cancer, and 9.7% of the disease burden due to cardiovascular disease.' These figures apply to 2003.
The Australian Institute of Health and Welfare has stated, 'Of all the risk factors for ill health, tobacco smoking is responsible for the greatest burden on the health of Australians...
Tobacco smoking is a major risk factor for: coronary heart disease; stroke; peripheral vascular disease; numerous cancers including cancers of the lung, mouth, oesophagus, larynx, kidney, pancreas, bladder, stomach and cervix and a variety of other diseases and conditions.
In 1998, an estimated 19,019 people died in Australia as a result of tobacco smoking. Around 13% of deaths from cardiovascular disease are due to smoking tobacco.'
2. Increasing the tax on cigarettes will increase the number of people who quit smoking
An increase in the cost of cigarettes as a result of increased taxes will led a significant number of smokers to give up the habit. The price of cigarettes is expected to rise markedly. It is expected that the price of a packet of 20 Winfield Blue cigarettes, for example, will rise by $0.98 after the first increase and by $5.25 by December 1, 2016.
In 2010, the Rudd government increased the price of cigarettes by 25 per cent. The federal treasurer, Chris Bowen, has claimed that this led to a reduction in smoking by 11 per cent. He suggested that on evidence from doctors and the Cancer Council, the government's latest move could stop an estimated 200,000 Australians smoking.
Paul Williams, a senior lecturer at Griffith University's School of Humanities, has also stated, 'There's overwhelming evidence that "sin taxes" reduce the consumption of legal but dangerous substances. In 2011, international research found that, for every 10 per cent of increased tax on cigarettes, we can expect 4 per cent of smokers to quit.
Indeed, Australian medicos claim Rudd's tobacco tax could see up to 200,000 Australian smokers give up the habit.'
Summing up the gains to be made Dr Becky Freeman, a Public Health Researcher at University of Sydney, has claimed, 'The Rudd government's forthcoming tobacco tax increase is the single most effective way to cut smoking and reduce the thousands of premature deaths that smoking causes each year. It's a gold star public health policy that is employed universally in nations that have successfully reduced smoking rates.'
ASH Australia has also stated, 'Raising the price of tobacco by taxation, and funding effective tobacco control policies, are proven effective methods of reducing smoking rates - and are consistent with social equity.'
3. Increasing the tax on cigarettes will reduce the number of people who begin smoking, especially among youth and the economically disadvantaged
It has been claimed that increasing the cost of cigarettes is a particularly effective means of discouraging people from beginning to smoke. The high price of the habit is believed to make establishing it seem less attractive. This is particularly the case among young people and those in more lowly paid jobs. Professor Ian Olver, the chief executive officer of the Cancer Council Australia has stated, 'This is very important, because disadvantaged groups bear a disproportionately heavy tobacco death and disease burden. And a modest tobacco tax increase would generate more than enough funding to provide tailored assistance programs for people on lower incomes struggling to quit.'
Anne Jones, the chief executive officer of ASH Australia, has also stated, 'It's a myth that poor smokers will be disadvantaged by a tobacco tax rise. They're the ones who are suffering most from tobacco, dying at higher rates and spending more on tobacco and related health costs. And people on lower incomes are more price-sensitive and will quit in greater numbers because of a tax increase.'
With regard to cigarette smoking among young people, the Cancer Council and the Heart Foundation have stated, 'Raising the price of tobacco products, particularly through manipulation of taxes or other imposts, is a key plank of a comprehensive tobacco-control policy, and is known to reduce smoking rates among younger smokers. Young people are particularly responsive to changes in cigarette prices given their relatively low disposable income.'
Anne Jones has also stated, 'We still have over 100,000 children who are weekly smokers and we now need a second increase to bring tobacco excise into line with world best practice.'
The Cancer Council and the Heart Foundation have further argued, 'Responsiveness to price among adolescents increases with intensity of smoking, since more committed smokers are more likely to purchase their own cigarettes. It is therefore likely that higher cigarette prices have their greatest impact among younger smokers when they are poised between experimentation and regular smoking.'
4. Increasing the tax on cigarettes will support federal finances
In August, 2013, the federal treasurer, Chris Bowen, announced that a decision to raise tax on tobacco would be one of the biggest revenue earners for the Government in its upcoming economic statement.
Mr Bowen said the $5.3 billion tax hike would be one of the biggest measures "in terms of revenue impact" in the economic statement. The treasurer further stated, "This is a decision which makes a contribution to returning the budget to surplus in 2016-17...'
Prior to the Rudd government's last increase in tobacco excise, a 2010 Treasury report on the significance of tobacco excise as a revenue raising measure stated, 'The excise revenue collected from tobacco is relatively stable. This is due to the effect of this per capita decline being largely balanced by the rate of population growth and the indexation on tobacco excise.'
However, it has been claimed that using tobacco taxes as a revenue-raising measure is unlikely to be successful in the long-term as, if the price increases serve to discourage smoking, tobacco sales will drop and so will the revenue return to government.
One means of addressing this problem is to increase the tax on cigarettes at a rate greater than the biannual rise in the Consumer Price Index (CPI). In his budget speech earlier in 2013, then treasurer Wayne Swan revealed that tobacco taxes would rise with average wages rather than inflation from March of 2014. This means the increase in tobacco excise would keep pace with income growth rather than the consumer price index, which tends to grow more slowly.
5. Increasing the tax on cigarettes will reduce the strain on the public health system
It has been noted that cigarette related illnesses place a large strain on the public health system. If the number of smokers can be cut back, this will result in a significance reduction in a major source of pressure on the health system. More than 750,000 hospital bed days per year in Australia are attributable to tobacco-related disease at an estimated cost of more than $31 billion a year.
The 2007 policy paper produced by the Heart Foundation on Tobacco and Cardiovascular Disease stated, 'In Australia, it has been estimated that smoking is responsible for 15,511 deaths each year and over 142,000 admissions to hospital annually...
Tobacco use imposes a significant financial drain on the community. For example, in 1998 health economists estimated that the non-voluntary and social costs of smoking were approximately $21 billion. These costs include healthcare expenditure, costs to smokers, their families and friends, costs to businesses, and the costs to public infrastructure.'
The Prime Minister, Mr Rudd, has further explained, 'There is a limit to the number of taxpayer dollars available to health.
I say again, when it comes to cancer, treating cancer and smoking-related cancers costs the Australian taxpayer hundreds of millions of dollars each year and frankly these are funds which we have to raise from the taxpayer.'
The federal Health Minister, Tanya Plibersek, has stated, 'There's a strong public health case for increasing the price of tobacco. Australia spends $31 billion [annually] on health care for ill smokers.'
Rob Moodie, professor of public health at the University of Melbourne, has stated, 'This rise will decrease consumption so in the long run reduce the burden on the health system, it will increase budget revenue, and it's in the interest of smokers themselves as it will help keep them alive.'