SYDNEY, Aug 1 (Reuters) - The Australian government said on Thursday it will increase tobacco taxes by 60 percent over the next four years as it seeks to return the budget to a surplus in 2016/17, dealing another blow to cigarette manufacturers.
The move, which the government said is also aimed at battling high rates of smoking-related cancer, follows the introduction in Australia last year of the world’s toughest cigarette plain packaging laws.
The first of four 12.5 percent increases will take effect on Dec. 1, raising the average cost of a pack of 20 cigarettes by A$2.20 ($2.20) to A$19.70. Further increases will kick in on Sept. 1 of the following three years.
Treasury said the increases will raise A$5.3 billion over the next four budget years.
The government has been struggling to return the budget to surplus, delaying promises to do so in the face of a stubbornly high currency and lower commodities prices.
The government also played up the health benefits of the policy, noting that smoking kills more than 15,000 Australians every year. There are around 3 million Australian smokers, the Australian Bureau of Statistics estimates.
“We all know that far too many people in Australia die from cancer,” Treasurer Chris Bowen told reporters. “This I know won’t be universally popular, but it is taken in the best interests of the nation.”
The government has claimed success in curbing smoking from the introduction of the world’s toughest laws on plain packaging late last year, a measure that other countries, including New Zealand and Ireland, plan to follow.
But cigarette makers, including British & American Tobacco PLC, say they have seen little impact on sales from the laws.