$20 a pack

In the news this week has been Kevin Rudd's proposal to increase the cost of cigarettes by up to $6.60 per pack, to raise the needed revenue for his health reforms. If this recommendation is successful cigarettes will cost around $20 per pack, so a pack a day smoker will be out of pocket $140 per week and about $7280 per year!

What does research indicate about price hikes in cigarettes? It shows that prices increases do lead to cessation in smoking. There is a price elasticity effect. This economic term can be used to justify this proposal. Price elasticity refers to the amount a product rises or falls in relation to a price increase or decrease.

In 1999, a World Bank review concluded that, all else being equal, price rises of about 10% would on average reduce tobacco consumption by about 4% in developed countries and about 8% in developing countries.

It has also been demonstrated that price increases are particularly effective for younger people, while have less of an impact on older smokers.

I was listening to Professor Rob Moodie speak about this issue last night. He said 80% of people backed a price increase and this recommendation had been on the table for a long time. Interestingly, when asked if cigarette should become illegal he did not think so and talked about ideally cigarettes becoming a 'boutique habit'. An interesting term, which refers to a minimal number of people smoking (those who can afford it I guess) and also smoking less.

The term boutique sounds a little too sophisticated for my liking and as all the research shows there is no safe level of smoking. Conversely, harm minimization strategies have a lot of merit so any policy or preventative strategy that reduces the prevalence of smoking is a good thing.

If this increase in tax takes effect it will be the first tax increase in 10 years (on cigarettes) in Australia and will put us back on par with the rest of the world. Not only does the tax hike have the capacity to raise billions of dollars for the health reforms, it also has the capacity to save the government some of the 31 billion dollars in health care for smokers. There are other hidden costs society carries due to smoking such as cleaning up after smokers (butts, cigarette packets), loss in productivity due to smoking related issues and absenteeism from the work force. Not to mention the human cost of the morbidity and mortality and the families this directly effects.

This tax is long over due, so hopefully all forms of government will work together to have this legislation passed.

Jessica