AUSTRALIA
The Australian parliament has passed legislation to ensure parity in the taxation of manufactured cigarettes and loose leaf tobacco.
According to the country’s revenue minister, Kelly O’Dwyer, a disparity currently occurs because the duty on cigarettes is a set amount per cigarette stick, based on an assumed 0.8 grams of tobacco. The duty on loose leaf tobacco is applied by reference to weight, at a rate per kilogram. As the average stick cigarette contains less than 0.8 grams of tobacco, the current rate of duty on loose leaf tobacco is a lower effective rate than for stick cigarettes.
Under the new rules, the per kilogram tobacco duty rate will be based on the assumption that the average cigarette contains 0.7 grams of tobacco. This will increase the duty imposed on loose leaf tobacco over four years. The first adjustment takes place on September 1, 2017, followed by annual adjustments to September 2020.
The Australia government expects the changes to deliver A$360m (US$283.7m) to the budget over the forward estimates period, and an additional A$35m in GST revenue.