EXCLUSIVE: Why SMOKERS are the surprise ‘winners’ from Budget 2020 – after the taxman made Australia home to the world’s most expensive cigarettes at almost $50 a pack
- No new 12.5 per cent tax increases were written into the 2020 Federal Budget
- That’s unlike the past eight years where the excise duties have regularly spiked
- The excise hikes have driven up the cost of average 25-packs of cigarettes
- Winfield Original Blues now cost about $42 and Marlboro Reds about $47
- But the excise will still go up in March and September each year as it is indexed
- Experts say price increases are one of the ‘most effective’ ways to stop smoking
For the first time in close to a decade Australian smokers haven’t been whacked with a double-digit tax increase by the Federal Budget.
Smokers, surprisingly, came off unscathed in Treasurer Josh Frydenberg’s economic rescue plan handed down on Tuesday evening.
But relief is bittersweet given government tax policies have driven up the price of a 25-pack of Malboro cigarettes to almost $50 over the past decade.
The government has hiked the tobacco excise and customs duty by 12.5 per cent each year for eight years from 2013 to 2020, the most recent just last month.
Budget winner: There are no additional 12.5 per cent taxes contained within Treasurer Josh Frydenberg’s 2020 economic rescue plan – unlike the past eight years
The Treasurer was all smiles as he and Prime Minister Scott Morrison walked to their breakfast media appearances on Wednesday morning
The excise also spiked a further 25 per cent on a one-off basis in 2010 – adding up to a 125 per cent total excise hike over the past decade.
However, no similar measures have been introduced for future years in this year’s Budget, meaning the latest hike in September is the last – at least for now.
The sting in the tail is the tobacco excise is still likely to continue to increase, just not to the same extent.
The government indexes the excise to average weekly ordinary time earnings twice each year, in March and September.
The Department of Health says the indexation measure ensures tobacco ‘does not become relatively more affordable over time.’
The tax hikes have washed through to the cigarette cabinets of stores across the nation. At the major supermarkets, online, a 25-pack of Winfield Classic now costs about $39, Winfield Original Blues $42 and Marlboro Red or Gold about $47.
A 2020 Daily Mail Australia graphic showing the average rise in cigarette prices over the past 20 years
The sting in the tail is that tobacco excise will continue to increase due to indexation – but smokers still won’t be whacked with annual 12.5 per cent hikes
The government expect to rake in about $15 billion in tobacco excise revenue this year, and health experts note price hikes are effective at reducing smoking.
Dr Sarah White, the Director of Quit Victoria, said prices increases were ‘probably the most effective measure that we have’ to reduce smoking.
‘They’ve been shown to be particularly effective at reducing tobacco uptake by young people – price is really important,’ Dr White said.
Dr White said the social and economic costs of smoking far outweigh the revenue the government brings in, but argued more of those funds should be directed to discouraging people from smoking.
‘I think they (the Federal Government) realised they need to find that balance between deterring and support,’ she said.
‘I think they do need to do more in helping motivate people to quit.’
Federal Budget 2020: The major policies to save the economy
At the heart of the Budget is a plan to fast-track personal income tax cuts which were originally set to come into force in 2022. Instead, they will be backdated to July 2020.
Workers will pocket a cash boost of up to $2,745 per year, with couples raking in up to $5,490.
Seven million Australians will pocket more than $2,000 in tax relief. Some will get much of it in their pay packets, others at tax time.
Mr Frydenberg also announced huge tax breaks for businesses, with 99 per cent of all companies allowed to completely write off new assets on the taxman for a year.
The measure would allow a small business to buy a new computer, a farmer a new harvester and a trucking company a fleet upgrade, all on the Australian Tax Office.
Meanwhile, welfare recipients will receive two one-off $250 payments in December and next March.
The payments are expected to go to 5.1 million Aussies including those who receive an Age Pension; Disability Support Pension; Carer Payment; Family Tax Benefit; Carer Allowance; Pensioner Concession Card (PCC) holders; Commonwealth Seniors Health Card holders and eligible Veterans’ Affairs payment recipients and concession card holders.