Skip to main content

Increase in Tobacco Excise – Options-stage Regulation Impact Statement – Treasury

On 1 August 2013, the Treasurer announced that the tobacco excise will be increased by 50 per cent over a four year period – a 12.5 per cent increase each year. The options-stage Regulation Impact Statement (RIS) prepared by Treasury notes that smoking tobacco may provide a number of benefits to consumers, including immediate pleasure, control of stress, improved self image and avoidance of withdrawal symptoms. However, it is also considered that there are costs to smoking tobacco which include: serious illness, such as cancer and premature death; deferral of expenditure away from necessities by lower income households; and diversion of health related resources, such as hospital beds. It is considered that social and economic costs of tobacco use are $31.5 billion each year. Tobacco is currently regulated in a number of ways, including: where tobacco can be consumed; the nature of tobacco packaging; and various taxes and charges including excise. Despite existing arrangements, it is considered that tobacco consumption continues to have serious health and economic impacts for individuals, their families and societies. Under the new best practice regulation requirements (effective from 8 July 2013) Australian Government departments and agencies, rather than the Office of Best Practice Regulation (OBPR), self assess the adequacy of their options-stage RISs. In particular, agencies must certify that the problem being addressed and the objectives of government action are well articulated; and that a range of feasible options, including regulation, no regulation or light handed regulation and do nothing, have been considered. Before relevant legislation and/or regulation is finalised, Treasury will need to prepare a details-stage RIS that is informed by consultation on this options-stage RIS. The details-stage RIS is formally assessed by the OBPR. A Deputy Secretary of the Treasury certified that this options-stage RIS meets the Government’s best practice regulation requirements.