Tobacco excise

Last year Simon Chapman was complaining that important data was missing from the Budget Papers:

When Treasurer Wayne Swan delivered this year’s federal budget in May, my colleagues and I sifted through the online budget papers for the data on tobacco tax receipts and projections. But this year, for the first time, the information was missing.

In the table on revenue, the data on excise receipts from tobacco is buried in a line labelled “other excisable products” and customs duties on tobacco imports under “excise-like goods”. A footnote explains that “tobacco estimates are not separately reported due to taxpayer confidentiality”.

Chapman explains the importance of this data:

Tobacco customs and excise data are absolutely critical to the evaluation of Australia’s plain pack law and its total program of making smoking history.

Indeed.

Despite the fact that the last Swan budget neglected to include tobacco excise data the subsequent PEFO, MYEFO and 2014-15 Budget Papers did include that data. How lucky is that? I was able to collect budgeted expectations of tobacco excise as well as actual tobacco excise collected going all the way back to 2007. So what happens is this; the government each indicates how much excise it expected to raise and also reports with a two year lag how much excise was raised. The lack of information in the last Swan budget means that there is a no actual data for 2011-12.

Tobacco - excise

That data are sourced from the budget papers and MYEFO. A slight complication is that we’ve seen some dislocation in the industry from discontinuing local production of tobacco, to discontinuing local production of cigarettes from imported tobacco. So the composition of tobacco supply has changed over time – that is likely to impact the overall dollar amounts.

Okay – but look at the overall dollar amounts.

First – actual excise collection exceeds budgeted collection in each year that we have data. Then there is a massive spike in budgeted excise revenue after plain packaging is introduced. Clearly Treasury (and by implication the government) does not expect to see a significant decline in tobacco consumption.

Before I leave this topic it is worthwhile indicating that the Australian government reaps much more in tobacco excise than smokers “cost” the economy and/or society. Here is Eric Crampton and Chris Snowdon on the topic.

Most of the costs associated with tobacco consumption – for example early death – are private costs.

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5 Responses to Tobacco excise

  1. Baldrick

    From Eric Campton:

    So tobacco leaves the Australian federal government up $2.7 billion and state governments up $833 million.

    Hallelujah. The next time somebody gets in my face about smoking, I can point them in the right direction.

  2. Bruce of Newcastle

    Looks like the data was missing last year because it was embarrassing. Did Ms Roxon’s dog eat her homework perchance?

  3. David of Adelagado

    Its a common myth that smokers are are drain on the public purse. In fact tobacco taxes raise about 7 billion dollars per year whilst the cost of public health care for smokers is only about 700 million per year. Fewer smokers means less revenue. The long term impact of this on federal and state budgets is a subject worth examining. (Believe it or not the the above figures come from The Victorian Anti-Cancer Foundations own website. The massive ‘additional cost’ to the public purse that is often bandied around comes about when the incredibly vague factor of ‘lost productivity’ is included in the equation).

  4. David of Adelagado

    Its a common myth that smokers are are a drain on the public purse. In fact tobacco taxes raise about 7 billion dollars per year whilst the cost of public health care for smokers is only about 700 million per year. Fewer smokers means less revenue. The long term impact of this on federal and state budgets is a subject worth examining. (Believe it or not the the above figures come from The Victorian Anti-Cancer Foundations own website. The massive ‘additional cost’ to the public purse that is often bandied around comes about when the incredibly vague factor of ‘lost productivity’ is included in the equation).

  5. Pedro

    Are the figures adjusted for excise increases. Clear an increase in excise could lead to higher govt receipts from lower levels of smoking. But as a supporter of voluntary taxes I’m happy.

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