Cigarette and alcohol pricing: does anyone have insights on the tax breakdown?
I don’t smoke much, and I don’t drink heavily either, but returning from a trip to Japan really opened my eyes. In convenience stores there, cigarettes are around $5 a pack, and you can grab a can of alcohol (like beer or 9% hard lemonade) for about $1.80. I even found 700ml bottles of Suntory whiskey for as low as $10, with some stores offering 4 and 5-liter bottles for around $38.
So, what are the duty, excise, and taxes in Australia for these products, and how much of the price is simply due to high initial pricing by the companies?
In Australia, both cigarettes and alcohol are subject to significant excise taxes and government duties, which greatly inflate their retail prices compared to countries like Japan.
Cigarettes:
– The taxation on tobacco products is quite high in Australia. As of 2023, the excise on cigarettes is approximately $1.30 per cigarette, which translates to around $39 per packet of 25 cigarettes. This is in addition to Goods and Services Tax (GST) of 10%.
– The high tax is aimed at reducing smoking rates and improving public health.
Alcohol:
– The excise tax on alcohol varies significantly depending on the type. For example, beer attracts a lower excise rate compared to spirits. As of 2023, the excise on beer is about $0.18 per standard drink, while spirits can be around $80.35 per litre of alcohol.
– There is also GST on alcohol, which adds another 10% to the price.
– Because of these taxes, the final consumer price for alcoholic beverages can be significantly higher than the base cost.
In Australia, companies may also add a higher markup on their products which can vary by brand, distribution costs, and market positioning. As a result, prices for cigarettes and alcohol in Australia can be substantially higher than in countries with lower tax rates like Japan.