Tobacco Tax Hike and Its Effects on Public Health


Tobacco smoking is one of the major causes of death in Australia. More than 10,000 tobacco-related deaths are reported in Australia every year. The government of Australia estimates the social costs associated with smoking, health costs included is over $ 31.5 billion yearly (Hall ).

The essay discusses the impacts of tax increase on tobacco and related products on society. It also explores how the tax accrued from tobacco has improved the public health sector thus raising the living standard of Australians. Aspects of the advent of illegal tobacco and the effects of tobacco as a health issue as well as the difficulty addicts face when trying to quit smoking habits.

Tobacco smoking

Cigarette smoking is one of the principal agents of death in Australia and around the world. Every year an estimated 10,000 Australians die of tobacco-related illnesses. It is also claimed that tobacco use costs the Australian government an estimated $ 100 billion yearly in form of direct medical intervention and loss of productivity (Hall). Significant steps among them the anti-tobacco campaigns and mass education on health dangers associated with smoking have reduced the epidemic.

Tobacco and Government Revenue

In restructuring and enhancing economic growth and development, the government has been compelled to increase excise duty on tobacco products. The increase in tax levied on tobacco is consequently transferred to smokers, implying increased expenditure on cigarettes. The tax hike on tobacco and associated products by 25% is higher than what the consumers anticipated (Martin). The increase has therefore amplified the price of cigarettes I.e. The cost of one stick retails at $0.2622 to about $ 0.327, loss tobacco leaf $ 328 to about $ 410 per kilogram (Australian Government). This makes a pack of 30 cigarettes cost about $ 2.16, which is relatively unaffordable to the average citizen.

The Australian government’s view on the tobacco tax increase is that it will help in bringing down smoking and consumption of other tobacco products to 6%, it is also anticipated that the policy will bring down the number of smokers by 3% (Martin). The increase is also expected to raise revenue collection from the tobacco business. The government expects to use the high revenue collected to initiate development projects, the projected revenue collection is expected to raise to an estimated five billion dollars spread in four consecutive years (Australian Government).

Tobacco and Public Health Care Improvement

The revenue accrued from tobacco and its products will help in reforming the Australian health care system. Targeted areas of improvement include; expansion and improvement of health facilities to ensure access to health care by all regardless of the financial implication of an individual (Murdoch and Strong). In addition, the country aims at uprooting smoking behavior which is a common practice, especially among the young generation despite the devastating health consequences (Murdoch and Strong).

In tandem with other existing revenue collections from tobacco, the revenue produced will provide a foundation for investment in better and affordable health care and hospitals by making the funds collected to be available to the Hospital national fund (HNF). Besides, restructuring and overhauling the health care system, the tax collected will also help in uplifting elective surgery which is unaffordable to many Australians. The funds will also be used to Improve and lessen emergency departments in regard to patients waiting times, provide more beds in hospitals and employ health doctors and nurses across the country.

The implication of Tobacco tax on stakeholders

The hike in tobacco duty has affected retailers and their businesses across the country (Joseph). Revenues accrued from tobacco companies played an important role in financing activities of political parties, especially the as liberal party. However, the new rigid labeling strategy introduced by the government and restricting internet marketing has condensed advertising companies to lose large revenue emerging from tobacco (Joseph). Thus the support has declined due to less profit gain as a result of tax increase. The introduction of antismoking campaigns has also affected tobacco companies especially those involved in the advertisement. No other alternative has been found to help them continue surviving in the business world because they heavily relied on tobacco advertisement to realize the high profits (Jensen and Ham).

Significant customer drop in the number of smokers presents an impending threat to smaller businesses. Smokers have preferred heading to outlets that provide “special” discounts than their usual retail shops (Jensen and Ham). Companies have are now compelled to pay more for insurance premiums to adjust their stocks for fear of policies lapsing and being liable to risks.

Tobacco Companies and Advertisement Strategies

The anti-tobacco campaigns waged by the government have led to diminishing business and even closing down of major companies dealing with tobacco products. Despite banning packaged advertising, advertising companies have re-invented themselves and have laid down strategies to reach a wider market despite the tax increase. Social networks such as Facebook and MySpace are turning out to be viable points of tobacco promotions (Kelly).

Buyers Implication

The rise in tobacco tax has changed the lifestyles of cigarette lovers. However, the younger population has been affected to the extreme, because it is more expensive for them to purchase. They have opted to use the money to buy other basic needs they consider better for instance, they will use the money to buy clothing’s (Heaney).

However, for the older people who have been smoking for more than 30 years and they have money to spend, they do will still buy the cigarettes and smoke. Also, smokers opts to travel far distance to find cheaper joints where they can buy affordable cigarettes, the stakeholders view this as a false “economy”. Cheap cigarettes compels piling therefore they find there way accessible to children which is undesirable. Piling of cigarette simplifies children to steal from here they practice to smoke eventually developing a smoking habit (Kelly).

A door for Illegal Tobacco

Introducing excise tax on tobacco and its products will bring in a dawn of a new era of illegal tobacco also known as “chop-chop”. Besides the introduction of the excise tax on tobacco, the health problem will continue to prevail in the society because of tobacco arising from the black market (Jamali).

Further, people who smoke legal tobacco will revert to illegal tobacco which will be easily available but pose a health hazard to the smoker (Jamali). Because of unhygienic preparation, it will bring a load to the current development in the national health care. Thus, the government through Taxation office estimates that over $ 98 million has been lost because of illegal tobacco.

The ostensible increase in chop-chop use gives the government a challenge in control tobacco use in the country. Chop- chop is often sold in plastic unbranded bags or rolled in form of unbranded “plastic “ cigarette, and may comprise of contaminants such as fungi and molds which spells a health issue to the smoker. “Chop -chop” will provide a challenge to the government health and underage smoking (Tobacco in Australia).

Moreover, its affordability and availability will thwart the government efforts in its anti tobacco campaigns and will increase tobacco intake. Illegal tobacco is mainly concentrated in the hands of organizers or “profits takers” in the “chop-chop” market who are mainly criminals who are occupied with other procedures of misconduct such as drugs, identity theft and money laundering among other types of crimes.

Tobacco and Health

Smoking stands out as a cause of major killer diseases including cancer of the lungs, blood pressure, mouth ulcers among many others. Cigarette contains more than four thousands chemicals mixtures and four hundred elements (Tobacco in Australia). The most dangerous of these elements includes; nicotine, tar and carbon monoxide.

Another dangerous diseases largely associated with tobacco smoking is the Cardiovascular illness. It is chronic and develops slowly over the years causing artery hardening (Tobacco in Australia). When fats and other cholesterol deposit on the arteries, they leave the arteries slim, stiff or blocked. When arteries narrow, they promote blood clot and hinder free circulation of blood in the body (Tobacco in Australia). Cardiovascular disease exists in various forms i.e. cerebral thrombosis and coronary thrombosis.

Tobacco is also associated with many types of cancer. The mouth Cancer starts at any part in the mouth but is most common underneath the tongue and lips. Other cancer types resulting from tobacco affect the cervix, bladder, kidney and pancreas. Other adverse effect of cigarette smoking is the health risk caused to those who inhale the smoke puffed by the smokers as a result of being close to smokers (Tobacco in Australia). For instance, babies who are by mothers who smoke during their pregnancy are susceptible to contracting asthma and allergies.

However, infants who are below the age of two years are disposed to respiratory toxicities and sometimes cradle death. Among the adults, there is increased risk in contracting lung cancer and rarely heart disease (Tobacco in Australia).

Why Tax Increase on Tobacco won’t deter Smokers

Apparently most people understands the need to stop smoking for instance to save several dollars a year and live longer. And they understand the sooner they do the better in saving their health. However, the tax issue won’t easily lessen tobacco smokers (Tobacco in Australia). This is because tobacco smokers understand what they get by smoking.

Thus, tobacco smoking has been used by people to handle their fear, i.e. handling stress, weight gain and fear of losing their pleasure among many fears. Not only the Tax will improve tobacco smoking quit, but the underlying fears of the smokers will be a central theme in defining their life.


The government decision to increase tax levied on tobacco and its products will help in decreasing tobacco use among the individual both young and old in the country. The taxes collected will play a central role in reorganizing and reshaping the entire health care in the whole country so every person can have better and affordable medical attention. However, efficient planning was necessary to ensure both in the tobacco industry and the government agreed on the way forward to its implementation.

Works Cited

Australian Government. Tax Office and Victoria Police to Curb Illegal Tobacco in Melbourne and Sydney.2003. Web.

Hall, Ashley. Cigarette Tax Sparks Panic Buying. 2010. Web.

Heaney, Clare. Cigarette Tax Hurts Local Convenience Stores, Milk Bars. 2010. Web.

Jamali, Dellaram. Cigarette “A Joke” Says Sebastopol Tobacconist. 2010. Web.

Jensen, Erik,and Ham Larissa. Tobacco Tax Rise Will Hurt Small Business: COSBOA. 2010. Web.

Joseph, Adam. Cigarette Blanding Won’t Kill Cigarette Branding. 2010. Web.

Kelly, Joe. Rudd’s Tobacco Tax Increase Yields $5bn Windfall for Hospitals. 2010. Web.

Martin, Peter. This Is It – The 25 Percent Cigarette Tax Hike. 2010. Web.

Murdoch, Lindsay, and Strong Geoff. Where there’s Smokes. 2010. Web.

Tobacco in Australia. Health Effects of Secondhand Smoke for Infants and Children’s. 2010. Web.

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