The Australian government has announced it will raise tax on tobacco by 12.5% every year from 2017-2020. By 2020, 69% of the cost of an Australian pack of cigarettes will be tax and the average pack of cigarettes is likely to cost AUS$45 (US$34), as reported by the World Economic Forum.
However, the Australian treasury views the increase as a health measure. It will also bring the country into line with the World Health Organisation (WHO) recommendations which advise a tax rateof 70% on the price of a cigarette.
The most effective approach to controlling the spread of tobacco use is through policies that directly reduce demand. According to WHO, on average, a 10% price increase on a pack of cigarettes would be expected to reduce demand by about 4% in high-income countries and by about 5% in low- and middle-income countries, where lower incomes tend to make people more sensitive to price changes.
The chart shows the countries where the percentage of tax on cigarettes is the highest: