Increased Sin Taxes Part Of Australia's Health Taskforce Solutions

by Mary Swire, Tax-News.com, Hong Kong

07 September 2009

The final report of the Preventative Health Taskforce, released recently by the Australian government, recommended increased 'sin' taxes and credits on order to combat obesity and alcohol and tobacco abuse.

The taskforce was commissioned by the government to investigate and make evidence-based recommendations on ways to improve the health of Australians.

The taskforce’s three key priority areas of obesity, alcohol abuse and tobacco use are reported to cost the Australian economy over AUD31bn (USD26bn) each year, in areas such as the health system, crime and lost productivity.

The recommended tax measures proposed by the taskforce included ‘sin’ taxes on tobacco and alcohol.

In particular, the target set by the taskforce is to reduce the incidence of smoking in adults to 10% or lower by 2020. The taskforce therefore recommended an increase in the excise duty on tobacco to ensure that the average price of a packet of 30 cigarettes is at least AUD20 (USD25), within three years.

It further recommended that there should be reforms to alcohol taxation and pricing arrangements, to discourage harmful drinking. The taskforce noted that the structure of taxes is presently within the ambit of the Henry taxation review but, nevertheless, said that there should be stepped increases in tax rates dependent on the strength of alcohol products. There should also be rules setting the minimum price of alcohol products, the report recommended.

Other measures, designed to combat obesity, included tax incentives for public transport, cycling and walking to mirror the tax breaks given towards car use within present fringe benefits tax system; and tax credits to help with the cost of enrolling children in sports.

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