Cigarette and alcohol pricing: Does anyone have details on taxes and fees?
I don’t smoke much and only drink occasionally, but after returning from a trip to Japan, where cigarettes cost around $5 a pack and beverages like beer and hard lemon (9%) are just $1.80 per can, I was surprised. I also noticed that 700ml bottles of Suntory whiskey could be as low as $10, and some stores even offered 4 to 5-liter bottles for about $38.
Can someone explain how much of the price in Australia is due to duty, excise, and taxes, compared to the companies’ initial pricing?
In Australia, the taxation on cigarettes and alcohol is significantly higher than many other countries, which contributes to the high retail prices you observed.
Cigarettes:
1. Excise Tax: Cigarette excise is calculated based on the quantity of cigarettes. As of 2023, the excise on a pack of 25 cigarettes is over $100. This excise is typically increased twice a year, so the price can fluctuate.
2. GST: A Goods and Services Tax (GST) of 10% is also applied to the total cost, including the excise.
3. Retail Markup: Retailers may also add a markup on top of the taxes, which varies by store.
Alcohol:
1. Excise Tax: Alcohol excise is applied per litre of alcohol, which can significantly increase the price, especially for spirits. For instance, the excise for spirits is around $91.25 per litre of pure alcohol.
2. GST: Similar to cigarettes, a 10% GST applies on top of the retail price.
3. State Taxes: Some states may also impose additional taxes on alcohol.
4. Retail Prices: Companies and retailers often set their own prices based on demand, overhead costs, and market competition, which can result in higher retail prices compared to other countries.
Overall, the combination of excise taxes, GST, and retail markups contributes to the high cost of tobacco and alcohol in Australia compared to countries like Japan.