Here in New York, a pack of cigarettes can cost over $12. However, maybe smokers in the Empire State should thank their stars that they do not live in Australia. A pack of cigarettes could cost more than $20 which, if approved, would be the second 25-percent hike in cigarette prices in just three years, the Huffington Post reports.
The price hike would be the result of a proposed tax increases. According to the West Australian, the proposal says that the tax would raise $5 billion in four years. The move is also a clear attempt to encourage consumers to quit smoking. Some research has indicated that smoking rates fall by 4 percent by every 10-cent increase.
This is not the first time that Australia has come after cigarettes. In 2010, Australia enacted a 25-percent tax increase on cigarette packs. According to the Australian Broadcasting Corporation, the tax prompted a rise in "panic buying", in which consumers rushed to buy cigarettes before the prices went up. Last month, Australia enacted a law that stripped cigarette packs of brand names, covering packs instead with black letters, an olive color and grotesque images of the ill health effects of smoking.
Australia's war against tobacco has drawn the ire of tobacco companies, of course, even though Australia has one of the lowest smoking rates. The Guardian reports that, because other countries have eyed Australia's laws with interest, the tobacco industry has even gone so far as paying countries like the Dominican Republic, Honduras and Ukraine to claim the Australia's new laws are hurting trade, even though none of the countries trades a significant amount with Australia. The tobacco industry has also argued that efforts like changing the appearance of cigarette packs will simply drive trade underground.
Others argue that increases in cigarette taxes unfairly target low-income people, forcing individuals to spend money on cigarettes that would have otherwise gone toward household essentials, like groceries. Quit Victoria Fiona Sharkie said in 2010 that an estimated 100,000 people would quit smoking and 25,000 children would not start as a result of the cigarette tax increase three years ago. She argued that low-income smokers are 13 percent more likely to quit than high-income smokers because of tax increases and that people with lower socioeconomic backgrounds are just as likely to live long lives as people who make higher wages.
The government has a number of "sin taxes" in places, partly in order to raise funding. Australia also taxes alcohol, with higher alcohol content drawing higher taxes. However, the proposed tobacco tax may not bring the revenue that officials hope. According to the Herald Sun, tobacco tax revenue fell by $341 million last year.