Tobacco tax increase has helped smokers to quit

Thursday 21 November, 2019

Large tax increases on tobacco since 2010 helped reduce smoking prevalence in Australia, a study published today in The Lancet Public Health has found.

The study, funded by Cancer Council Victoria, is the first internationally to analyse the effects of large sustained tax increases on overall smoking prevalence.

Dr Michelle Scollo from Cancer Council Victoria, who was one of the  authors on the study, said while they found large tax increases worked to reduce the number of people who smoked, the decline in smoking prevalence would have been steeper if some smokers had not switched from smoking ready-made cigarettes to roll-your-own tobacco instead of quitting completely. 

“This was likely to be because at the time of the first large tax increase in 2010 and soon after, roll-your-own tobacco was a much cheaper alternative to ready-made cigarettes,” she said. 

“To maximise the effectiveness of increases in tobacco taxes and to reduce product switching, tobacco product taxes should be equivalent for ready-made and roll-your own tobacco. We also recommend letting the public know ahead of the implementation of any large tax increase. This is especially important from an equity perspective to provide the best chance of quitting completely for smokers from all backgrounds.”

Cancer Council Victoria CEO Todd Harper said the study is a win for tobacco control, not just in Australia, but world-wide.

“Tobacco tax increases have an important effect on reducing smoking prevalence, and this study has significant implications for guiding tobacco policy in other countries. Over the period of the study in Australia, we saw tobacco companies bringing out smaller pouch sizes – even ‘kiddy’ pouches as small as 15 grams of tobacco.  We also saw companies adding ‘bonus’ sticks into cigarette packs to tempt consumers to keep buying.  We would like to see standardisation of cigarette packs to 20 sticks and pouch sizes to 30 grams, as well as use of minimum prices, to reduce the ability of tobacco companies to market cheaper products and thus lessen the impact of tobacco tax.” 

He also noted the need for increased funding of mass media campaigns to encourage and support smokers to quit.

“Fully-funded mass media campaigns are a key element of continued success in reducing smoking rates. There has been a lapse in funding for campaigns to motivate and support smokers to quit since 2013, and more smokers would have been helped to quit over that period if such campaigns had been fully funded. We have clear evidence that when funded at the right levels, these campaigns can help smokers quit,” said Mr Harper.

Using data from Australians in five major cities aged 14 and over, the effects of two tax increases were analysed:

  • A 25% tax increase implemented in May 2010 without any forewarning.
  • A series of 12.5% tax increases implemented every year from December 2013 to April 2017, that were pre-announced several times in the months before taking effect. In total, the increase was a 40% rise in tobacco tax over these four years.

Overall, the study found that large tax increases reduced smoking prevalence. Compared with the immediate 25% increase in mid-2010, the effects of the pre-announced series of annual 12.5% increases starting in December 2013 were larger, and more equitable for the low socio-economic group, who are more affected by pricing.

Dr Scollo said “The data show that many smokers - instead of quitting - switched from ready-made cigarettes to roll-your-own tobacco, especially after the 25% tobacco tax, because it was cheaper. Over the period of the 12.5% series of increases, the rate of switching from ready-made cigarettes to roll-your-own tobacco stopped – and that might have been because both forms of tobacco had by then become ever more expensive, so quitting became a much more important option to escape the price increases. But it’s clear that both types of tax increases worked but would have had more impact on reducing smoking prevalence if the tax applied to roll-your-own tobacco had made them as expensive as ready-made cigarettes.”

One further annual tobacco tax increase is scheduled to occur in Australia in September 2020.