Cigarette and alcohol pricing inquiry: Does anyone have insights into the tax breakdown?

I don’t smoke and I only drink occasionally, but after returning from Japan, where convenience stores sell cigarettes for around $5 a pack and cans of beer, gin, or hard lemonade (9%) are about $1.80 each, I’m curious. I found 700ml bottles of Suntory whiskey for as low as $10, and some stores even offered 4 to 5-liter bottles for about $38.

What are the excise duties and taxes on these products in Australia? How much of the higher prices here can be attributed to company markups?

One thought on “Cigarette and alcohol prices . Anyone have a breakdown of taxes etc?”

  1. In Australia, the price of cigarettes and alcohol is significantly affected by high taxes and excise duties imposed by the government. Here’s a breakdown of the main factors:

    Cigarettes:

    1. Excise Tax: Cigarette prices in Australia include a very high excise tax, which is calculated based on the quantity of tobacco. As of recent rates, the excise on cigarettes can be over $1 per cigarette, meaning a pack (containing 20 cigarettes) can have an excise tax of approximately $20.
    2. GST: In addition to excise, a Goods and Services Tax (GST) of 10% applies on the retail price of cigarettes.
    3. Retail Markup: Tobacco companies also add their margins which can vary depending on the brand.

    Alcohol:

    1. Excise Duty: Alcohol is also subject to excise duties that vary based on the type of drink and its alcohol content. Beer, for instance, has a different excise rate compared to spirits like whiskey. For example, the excise on beer might be around $2 per liter, while spirits can have an excise of over $80 per liter of alcohol.
    2. GST: Alcohol is subject to the same 10% GST as cigarettes, which applies to the final retail price.
    3. Retail Pricing: Just like with tobacco, alcohol companies mark up their products based on production costs, branding, and local market conditions.

    Conclusion:

    To summarize, while the prices of cigarettes and alcohol in Australia are high, a substantial portion of that expense comes from government taxes and excise duties. This leads to retail prices that are much higher than you might find in countries like Japan, where these taxes are considerably lower. Companies also have their own pricing strategies, but the heavy taxation is the primary factor in the high costs.

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