Australia - federal government considering a hike in tobacco tax..

April 14, 2010 - The Government is considering a hike in tobacco tax to fund sweeteners offered the states by Prime Minister Kevin Rudd as he tries to win their endorsement for his $18 billion health reform package.

The Government's National Preventative Health Taskforce has called for a tax rise that would add $6.50 to the cost of a pack of 30 cigarettes in the May budget. (Australia - cut smoking by one-third economy would be one billion dollars better.., Australia - Comments on the National Preventative Health Taskforce's Proposal..)

Health Minister Nicola Roxon is pushing for Cabinet endorsement of a recommendation from the National Preventative Health Taskforce to lift the price of a 30-pack of cigarettes from $13.50 to $20.

It would be the first rise in the tax rate on tobacco in more than a decade and would bring Australia into line with the rest of the world. Australia has the third lowest tobacco tax rate in the developed world at 68 percent. Most other countries charge tax rates of between 75 and 80 percent.

Quit Victoria executive director Fiona Sharkie welcomed the proposal, saying it was number one on the body's budget wish. "We are very happy, increasing the price on cigarettes is the single best way to bring smoking rates down," she said. A tobacco tax hike could raise two-thirds of the $3 billion Prime Minister Kevin Rudd needs to pay for the health and hospital sweeteners he has offered the states, as he tries to win their endorsement of his health reforms. The government needs to find an extra $3 billion to meet its promises on extra funding for elective surgery, emergency departments and aged care during the next four years. It will need to find a further $15 billion to fund the reforms between 2015-20.

But up to 3 million smokers would be hit if the price of a pack of 30 cigarettes rose from around $13.50 to $20 per pack over a three-year period under the preventative health taskforce model. The taskforce reckons such a hefty hike would reduce the number of smokers by a million within a decade. This could help the Government save some of the $31 billion that smoking costs the community each year.

VicHealth CEO Todd Harper said pricing was the most important way to reduce smoking. "I think it's an essential strategy to protect the long-term health of Australians," he said. "More than half of all long-term smokers will die because of their smoking." Young people and low income earners would be most affected by any price hike, he said. He also called for a portion of the extra revenue to be used for health promotion programs supporting and encouraging people to quit and stop a new generation of smokers in its tracks. It was also important to focus on making cigarette packaging less attractive, ramping up media advertising of quit programs, and extending the availability of quitting services, he said.

A Newspoll found 88 percent of Australians backed such a tax rise provided the money raised was spent on health.

The premiers will gather for the Council of Australian Governments meeting in Canberra (capital of the nation of Australia in the Australian Capital Territory (ACT)) on Monday, April 19th.

References: **VIDEO** Packet of cigarettes could cost $20 a packet under proposed Rudd tax, Elissa Doherty, Sue Dunlevy, Herald Sun, 4/14/2010; Smokers may pay $20 for pack of cigarettes as Rudd seeks to pay for health reforms, xboxworld.com.au, 4/14/2010; Smokes $20 a pack under tax revamp ANDREW PROBYN, SHANE WRIGHT and ANDREW TILLETT CANBERRA, The West Australian, 4/15/2010.