On 29 April 2010, the then Prime Minister announced a one-off increase of 25 per cent to the excise and excise‑equivalent customs duty applying to tobacco products. The increase was intended to progress recommendations of the National Preventative Health Strategy Report and the Australia’s Future Tax System Review in reducing the affordability of tobacco products. A Regulation Impact Statement was not prepared by the Department of the Treasury for the joint proposal. Consequently, a Post-implementation Review (PIR) was required to be undertaken in line with the Government’s best practice regulation process. The PIR found that the one off increase in tobacco excise and excise equivalent customs duty met three of four identified policy objectives. In particular, the increase in excise:
- decreased consumption of tobacco with clearances (tobacco importation) of tobacco declining 11 per cent;
- reduced the number of tobacco smokers demonstrated by a temporary increase in attempts to quit; and
- made available additional funding for related health care through the Health and Hospitals Network Fund.
The measure did not result in a closer alignment of Australia’s tax treatment of tobacco (in terms of the ratio of taxes to the retail price of tobacco) with comparable countries over the analysis period. Although there was short-term increase in the tax proportion of the sale price, this was more than offset over the analysis period by non-tax related price increases of tobacco. The PIR identified that the immediacy of the price increase resulted in substantial compliance costs for industry. These costs could have been avoided with a 2-3 day implementation period. The PIR was prepared by The Treasury and assessed as adequate by the Office of Best Practice Regulation.
313 KB]
725 KB]