Revenue from tobacco taxes in Australia. In Tobacco in Australia: Facts and issues

Listed in:

• Impact of tobacco taxation
• ... on tax revenue

Abstract

For most forms of taxation, revenue can be expected to increase over time due to increases in population and consequently the number of people from whom tax may be collected. As outlined in Section 13.1, smokers are only moderately price sensitive, and—as outlined in Section 13.2—duties have been indexed and duties and fees on tobacco products have been periodically increased over the past 30 years. The increasing number of potential smokers and increased level of tax might lead one to expect tobacco tax revenue to have risen significantly since the 1970s. However, offsetting the effects of population growth and increased tobacco taxes, population use of tobacco has been falling steadily since the 1980s due to the combined impact of increased costliness, awareness about health risks, declining social acceptability of smoking, campaigns encouraging quitting, improved treatments for tobacco dependence, and greatly reduced opportunities for smoking. This section examines the changes in revenue from tobacco products that result from the combined impact of increased population, increased tax rates and steadily falling consumption.