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Tobacco in Australia Facts & Issues Tobacco in Australia Facts & Issues A comprehensive online resource tobaccoinaustralia.org.au Book excerpt List of chapters available at tobaccoinaustralia.org.au Introduction Chapter 1 Trends in the prevalence of smoking Chapter 2 Trends in tobacco consumption Chapter 3 The health effects of active smoking Chapter 4 The health effects of secondhand smoke Chapter 5 Factors influencing the uptake and prevention of smoking Chapter 6 Addiction Chapter 7 Smoking cessation Chapter 8 Tobacco use among Aboriginal peoples and Torres Strait Islanders Chapter 9 Smoking and social disadvantage Chapter 10 The tobacco industry in Australian society Chapter 11 Tobacco advertising and promotion Chapter 12 The construction and labelling of Australian cigarettes Chapter 13 The pricing and taxation of tobacco products in Australia Chapter 14 Social marketing and public education campaigns Chapter 15 Smokefree environments Chapter 16 Tobacco litigation in Australia Chapter 17 The economics of tobacco control Chapter 18 The WHO Framework Convention on Tobacco Control Appendix 1 Useful weblinks to tobacco resources Tobacco in Australia: Facts and Issues. Fourth Edition A comprehensive review of the major issues in smoking and health in Australia, compiled by Cancer Council Victoria. First edition published by ASH (Australia) Limited, Surry Hills, NSW, 1989 Second edition published by the Victorian Smoking and Health Program, Carlton South, Victoria (Quit Victoria), 1995 Third edition published by Cancer Council Victoria 2008 in electronic format only. ISBN number: 978-0-947283-76-6 Suggested citation: Scollo, MM and Winstanley, MH. Tobacco in Australia: Facts and issues. 4th edn. Melbourne: Cancer Council Victoria; 2012. Available from www.TobaccoInAustralia.org.au OR <Author(s) of relevant chapter section>, <Name of chapter section> in Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. 4th edn. Melbourne: Cancer Council Victoria; 2012. <Last updated on (date of latest update of relevant chapter section)> Available from < url of relevant chapter or section> Tobacco in Australia: Facts and Issues; 4th Edition updates earlier editions of the book published in 1995, 1989 and 2008. This edition is greatly expanded, comprising chapters written and reviewed by authors with expertise in each subject area. Tobacco in Australia: Facts and Issues is available online, free of charge. A hard copy version of this publication has not been produced. This work has been produced with the objective of bringing about a reduction in death and disease caused by tobacco use. Much of it has been derived from other published sources and these should be quoted where appropriate. The text may be freely reproduced and figures and graphs (except where reproduced from other sources) may be used, giving appropriate acknowledgement to Cancer Council Victoria. Editors and authors of this work have tried to ensure that the text is free from errors or inconsistencies. However in a resource of this size it is probable that some irregularities remain. Please notify Cancer Council Victoria if you become aware of matters in the text that require correction. Editorial views expressed in Tobacco in Australia: Facts and Issues. Fourth Edition are those of the authors. The update of this publication was funded by the Australian Government Department of Health and Ageing. Cancer Council Victoria 1 Rathdowne Street Carlton VIC 3053 Project manager: Michelle Scollo Senior Policy Adviser, with assistance from Merryn Pearce, Policy and Projects Officer, Quit Victoria. Editorial advice and editing: Rosemary Moore Website design: Creative Services, Cancer Council Victoria Design and production: Jean Anselmi Communications Proofreading: Caz Garvey Tobacco in Australia Facts & Issues A comprehensive online resource tobaccoinaustralia.org.au Chapter 13 The pricing and taxation of tobacco products in Australia Chapter 13: The pricing and taxation of tobacco products in Australia i Chapter 13 The pricing and taxation of tobacco products in Australia Sugar, rum and tobacco are commodities which are no where necessaries of Michelle Scollo life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation. […] In the meantime, the Quit Victoria people might be relieved from some of the most burdensome taxes: from those Cancer Council Victoria which are imposed either upon the necessaries of life, or upon the materials of manufacture. The laboring poor would thus be enabled to live better, to work cheaper, and to send their goods cheaper to market. The cheapness of their goods would increase the demand for them, and consequently for the labour of those who produce them. This increase in the demand for labour, would both increase the numbers and improve the circumstances of the labouring poor. Their consumption would increase, and together with it the revenue arising from all those articles of their consumption upon which the taxes might be allowed to remain. Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations, 1776i i From Part 5 Public debts Book V of the Revenue of the Sovereign or Commonweatlth—p294 of Bobbs-Merril edition. Published in New York 1961. Date of last update: 10 October 2012 Tobacco in Australia: ii Facts and Issues Table of contents 13.0 Introduction ........................................................................................... 1 13.1 Price elasticity of demand for tobacco products .......................................... 4 13.1.1 Estimates of elasticity ................................................................. 4 13.1.2 Various methods of measuring elasticity ....................................... 4 13.1.3 Impact of price increases on uptake, continued consumption and quitting .................................................................................... 5 13.1.4 Price sensitivity among various population groups ......................... 6 13.1.5 Price elasticity for tobacco products other than cigarettes ................ 6 13.1.6 Theories of demand ................................................................... 7 13.1.7 Limitations of studies assessing price sensitivity ............................. 8 13.2 Tobacco taxes in Australia .......................................................................11 13.2.1 Federal excise and customs duty ................................................ 11 13.2.2 State tobacco licence fees .......................................................... 13 13.2.3 Goods and services tax ............................................................. 16 13.2.4 Tax levels in Australia compared with overseas ............................ 17 Technical appendix 13.2.1 ....................................................................................................... Abolition of state franchise fees on tobacco ................................. 20 13.3 The price of tobacco products in Australia ................................................21 13.3.1 Recommended retail price of tobacco products ............................ 21 13.3.1.1 Changes over time in the recommended retail price of a standard pack .............................................. 21 13.3.1.2 The large pack: a peculiarly Australian phenomenon ............................................................ 22 13.3.2 Prices at which tobacco products are sold/purchased .................... 26 13.3.2.1 The Cigarettes and Tobacco Sub-group of the Consumer Price Index................................................ 26 13.3.2.2 Discounting in the tobacco market ............................... 27 13.3.2.3 Prices paid as reported by smokers ............................... 28 13.3.3 International comparisons of the price of tobacco products ................................................................................. 29 13.3.3.1 International comparisons of cigarette prices ................. 29 13.3.3.2 International comparisons of prices paid ....................... 30 Technical Appendix 13.3.1 ...................................................................................................... Why health groups were concerned about large pack sizes ............. 34 Technical appendix 13.3.2 ....................................................................................................... Recommended retail price per stick of leading brands in Australia compared with reported prices paid—Australia 2002 to 2010 ........................................................................... 37 Date of last update: 10 October 2012 Chapter 13: The pricing and taxation of tobacco products in Australia iii 13.4 The affordability of tobacco products .......................................................39 13.4.1 Changes in affordability of cigarettes over time in Australia ........... 39 13.4.2 Affordability of cigarettes to Australian children .......................... 39 13.4.3 International comparisons in cigarette affordability ...................... 41 13.4.4 On a lighter note ..................................................................... 42 13.5 Impact of price increases on tobacco consumption in Australia ...................45 13.5.1 Declining excise and customs receipts following price increases in Australia ............................................................... 46 13.5.2 Declining prevalence following price increases in Australia: changes in reported cessation and consumption and other smoking and product-related behaviours among
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