Tobacco tax policies questioned

| February 2, 2016

Questions have been raised about the viability of an Australian Labor Party proposal to increase excise taxes on tobacco products so as to generate additional revenue for education, budget repair and other yet-to-be-announced measures, according to a story in the Australian Financial Review relayed by the TMA.

The Labor Party believes the tax increases it is proposing would generate A$47.7 billion (US$33.9 billion) over 10 years.

But John Daley, chief executive of the Australian think tank Grattan Institute, is quoted in the story as saying that the country’s standardized packaging legislation seemed to be lowering consumption, and raising taxes would reduce it further.

At the same time, the cost of the programs that the Labor Party wanted to fund with higher taxes on tobacco products would increase at least as rapidly as the gross domestic product (GDP), he said.

But GDP data released in December 2015 had shown that the volume of tobacco consumed had declined by more than 18 percent to the end of the September 2015 quarter.

In addition, the RMIT [Royal Melbourne Institute of Technology]University economics professor Sinclair Davidson had stated that smoking in Australia had been declining for 50 years, and that at some point it was going to reduce and not fund a growing area such as education.

Category: Breaking News

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