Cigarettes could hit $40 in Australian tax hike

The cost of a packet of cigarettes could rise to $40 (€26) after Australia’s Federal Government confirmed a hike in the tobacco excise as part of the 2016 Budget.

Finance Minister Mathias Cormann confirmed the Budget would contain a 12.5% annual increase in tobacco excise to 2020.

The measure is a copy of a Labour policy. But leaked Treasury modelling shows a $19.5 billion (€12.7b) funding hole in Labour’s revenue estimates for the measure.

Labour wants to use revenue from the excise hike to pay for its school-funding plan over 10 years.

“We are implementing in the Budget the same policy on tobacco excise as Labour has previously announced and what is very clear is that Labour’s sums just don’t add up,” Mr Cormann said.

He said the government’s assumptions for calculating the tax from cigarettes would be released as part of the Budget tonight.

Opposition finance spokesman Tony Burke dismissed the modelling, saying even if it was accurate Labour was planning to make more savings than it was planning to spend.

“The claim that anything is unfunded is purely fictitious,” he told ABC radio.

“Labour has never released what their assumptions or constructions were.”

Shadow treasurer Chris Bowen says the Parliamentary Budget Office would update Labour’s policy costings after the Budget and again after the pre-election fiscal statement.

He also denied the revenue from tobacco taxes would go directly to schools, saying it was just one of Labour’s planned savings.

The measure was welcomed by medical experts and prompted some smokers to admit the costs would force them to quit.

“That would mean [I would] just quit straight up,” a 22-year-old woman told ABC News.

“I can’t afford 40 Australian dollars (€26). It’s not worth the habit. It’s already expensive as it is. I find at the end of the week I’ve probably spent 200 Australian dollars (€130) just on smokes.”