We are all aware of the physical and health-related costs of smoking, however the financial costs are often an afterthought. In the last 30 years, the price of tobacco products has continued to rise in a bid to deter the Australian public from picking up the habit.
The health industry and health advocates have been instrumental in lobbying for tobacco taxes and regulations on tobacco product advertisements. For the most part, these efforts have been successful; the 2022-2023 Australian Government Department of Health and Aged Care found the smoking rate between 14-50 year old individuals was 11.8% — almost half of what it was in 1995.
So, what’s the cost of cigarettes in Australia today? In this guide, we take a look at the cost of cigarettes over the years and reveal the markups we can expect to see in the future.
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The Health Cost of Smoking
The costs of smoking are both health-related and financial, but in many cases, it’s the physical price paid, rather than the money paid, that is the driving force behind quitting.
The health impacts of smoking are widespread and well-known. Cigarette smoking has been linked to 19 types of cancer, 7 forms of cardiovascular disease, asthma, and chronic obstructive pulmonary disease (COPD).
Beyond these serious and life-threatening illnesses, smoking also interferes with multiple bodily systems which results in a significantly impaired quality of life. When you smoke, you inhale over 7,000 chemicals and toxic substances. These toxins wreak havoc on practically every organ in your body.
Nicotine, the main addictive chemical in tobacco, changes the natural chemical structure in the brain which leads to addiction, dependency, heightened anxiety, depression, and mood swings.
We know that cigarette smoke does an enormous amount of damage to the cilia, which are the hairlike structures that rid the lungs of debris and toxins. This makes breathing more challenging and affects our ability to move and exercise comfortably.
Blood flow through the body is also affected by smoking. The carbon monoxide and nicotine content narrows the arteries and limits the amount of blood flow, and therefore oxygen, that is sent to the muscles.
Several chemicals in tobacco are also known to interfere with appetite, metabolism, and hunger receptors, which can cause dangerous nutritional deficiencies and weight fluctuations.
Additionally, tobacco can cause a number of skin concerns and conditions. The tar in cigarettes is responsible for the yellowing of the fingers and nails. The chemicals in tobacco actually depletes the collagen and elastin fibres in the skin, which results in premature ageing.
Nicotine also affects the immune system, inflammation, and skin cell growth, which is why smoking can lead to skin conditions including eczema and psoriasis. There’s no mistaking the physical costs of smoking, but the financial costs are just as detrimental for those grappling with a smoking habit.
Cost of Cigarettes in Australia: A Timeline
Since the 1940s, the New South Wales Retail Tobacco Traders’ Association has been distributing lists of the wholesale and recommended retail price (RRP) of cigarettes from international companies and smaller retailers.
In the 1940s, ‘50s, and ‘60s, Craven A Cork Tip 20s was one of the most popular cigarette brands. It is one of the few brands from the ‘40s that was still available during the most recent reporting year in 2015.
For this reason, we’ll use Craven A 20s to explain how cigarette pricing has changed over the years. To compare the price of cigarettes over the years, we need to adjust the prices to account for inflation to ensure the prices can be compared dollar-for-dollar.
When adjusted, we can see that the price for a pack of Craven A 20s was just $5 in 1940. Surprisingly, the cost was about the same in 1990. However, prices quickly began to rise after the 1990s.
In the 10 years between 1990 to 2000, the real-stick price (price per cigarette) of Craven A 20s almost doubled. From 1990 to 2015, the price increased 4.5 times over. In 2015, that very same pack of Craven A 20s cost $22.72.
A similar trend was noted across other popular cigarette brands. Between 1980 and 2020, the cost of Winfield cigarettes increased ninefold, almost tripling between 2010 and 2020. Let’s take a look at how the cost of Craven A 20s has increased over time.
Cost of Popular Cigarette Brand (2012 dollars)
So, we know that the cost of cigarettes has continued to rise steadily since the 1990s.
But what (aside from inflation) has spurred this change?
Why Has the Cost of Cigarettes Risen? Cigarette Tax Laws Explained
So, why has the cost of cigarettes risen so significantly in the last 30 years?
Taxes are largely responsible for the change. The level and nature of tobacco duties, fees, and taxes have traditionally been the main determinants of the final retail price of cigarettes (as opposed to production costs or marketing factors that determine the costs of most other consumer goods).
The cost of the raw materials, manufacturing processes, promotional activities, and distribution of tobacco products only determine the final profits for tobacco growers, manufacturers, wholesalers, and retailers rather than the price of the cigarettes themselves.
In Australia, heavy tobacco taxes have prompted a spike in the price of not only cigarettes but all other tobacco products.
The History of Tobacco Excise Taxes
There have been a number of major changes in tobacco taxation from the 1940s to 2020.
These changes came into place as the health industry activists advocated for rises in tobacco taxes.
Let’s take a look at how this played out over the years.
Tobacco Taxes from 1901 to 1990
The federal government has imposed excise taxes on Australian-made tobacco products and customs duty on imported products since the 1901 Excise Act and Customs Act were introduced.
Up until 1999, the federal taxes and customs duties were calculated by the weight of the tobacco products. This included the weight of the paper and the filter but excluded the weight of the packaging.
In the early 1900s, cigarettes were charged one shilling per pound of product weight. Duty on tobacco cigarettes was higher than duty on non-cigarette tobacco products.
In 1983, a number of changes to tobacco taxes and customs duty were implemented.
Firstly, the rate of the federal excise tax and customs duty on tobacco products was linked to the Australian Consumer Price Index (CPI). This meant that the taxes and duties on tobacco products would automatically rise twice each year. This continues today.
Additionally, the rate of duty for cigars was made equal to that of cigarettes.
Lastly, the rate for non-cigarette tobacco was increased by $5 per kilo.
In the 1984, 1985, and 1986 budgets, the tax rate for tobacco smoking products (per kilo) increased further by $5, another $5, and $1.90, respectively.
Previously, Australian-produced tobacco products were taxed at a lower rate than imported tobacco. However, excise taxes and customs duties were made equal in 1994.
Tobacco Taxes from the 1990s – 2010
It wasn’t until the mid-1990s that major state fees and taxes were introduced and cigarettes became significantly more expensive.
During the 1990s, several health bodies advocated for a rise in federal excise taxes. The lobbying was successful, and the government began to respond.
In addition, the biannual CPI increases, the government implemented several ad hoc tax increases on cigarettes several times between 1990 and 2000.
There was a $5 increase in 1992, a 3% increase in 1993, and 5% increases in 1994 and 1995.
The final increase of 5% planned for August 1995 was brought forward in conjunction with the May Federal budget, and increased to an immediate 10% rise.
From 1999 to 2010, there were no additional tobacco tax and customs duty increases aside from the biannual CPI adjustments.
Cigarette Taxes Post-2010
2010 saw the most significant jump in cigarette taxes since the early 1990s.
In April 2010, another ad hoc tax and customs duty increase was actioned. Taxes and duties on cigarettes increased by 25%.
From 2013, it was decided that there would be another annual tax and duty rate increase applied for the eight years spanning from 2013 to 2020 in addition to the biannual CPI increases. The rate increased by 12.5% each year for eight years.
Adjusting for inflation, when comparing the costs of a leading cigarette brand by its 1940 price, the price was 1.1 times higher by 1990, 2.3 times higher by 2000, and 8.5 times higher by 2021.
In May 2023, the government has stated it will increase tobacco prices by 5% each successive year. That means a 20s-pack would cost 15% more than it did in 2023. If your favourite pack cost around $40, you’ll have to pay $50 for it by 2026.
The goal behind the 2023-2026 price increases is to raise $3.3 billion for federal government programmes in the next few years — most likely including stop smoking and to support quitting campaigns.
Today, the Australian tobacco industry generates approximately $14 billion of tax revenue annually.
These taxes are considered a major driving force for the declining smoking rates.
As mentioned, the smoking rate among adults halved between 1995 and 2019. Additionally, between 2001 and 2019, the number of adults who had never smoked jumped from 48% to 61%.
Between 2017 and 2020, smoking among Australians declined from 17.87% to 13.3%.
In other words, the price hike is playing a significant role in deterring people from continuing to smoke, or from picking up a cigarette in the first place.
How Much Do Cigarettes Cost in Australia Now?
As of 2023, a pack of cigarettes costs $40 on average. As per the new taxes imposed in May 2023 up to 2026, these prices will make packs cost $50 by the time.
To put these prices into context, a pack a day smoker (20 pack) would currently spend $12,775 (in 2023) on cigarettes per year. By 2026, they’ll be saving around $15,000.
As of 2022, on average, a packet of cigarettes costs about $40.
Currently, a 25 pack of a leading brand sits at $48.95 at Coles, while a 20 pack of cigarettes sits around the $35 mark.
Using the 20 pack as our reference, a pack-a-day smoker currently spends $12,775 on cigarettes per year.
That’s a total of $127,750 over 10 years.
If you think of tax hikes as savings interests when you stop smoking, that’s truly a lot of cash!
Will Cigarette Costs Continue to Rise?
It’s expected that excise taxes and customs duties will continue to rise in the coming years.
Both sides of politics back the large increases in taxes, as the taxes continue to drive smoking rates down significantly.
Between 2019 – 2020, and 2024 – 2025, taxes on tobacco alcohol, and petrol are expected to grow by 5.1%.
Tobacco taxes are currently the fourth largest tax collected by the government in 2020.
In 2021, Federal Health Minister Greg Hunt announced a $20 million strategy to reduce smoking rates to below 10% by 2025 to boost preventative health outcomes.
The Australian Government plans to continue to reduce the affordability of tobacco products from 2022 to 2030.
The newly imposed taxes in 2023 will increase tobacco prices by 5% each year up to 2026, making a single 20s pack cost around $50 by the time.
By 2030, experts expect a 30-pack of cigarettes to cost $100.
This means that a pack of cigarettes a week will cost $33,605 or even around $45,000 annually.
How Much Money Will I Save If I Quit Smoking?
If you’re struggling with bothersome withdrawal symptoms or looking for an incentive to quit, it can be motivating to look at just how much money you can save by not smoking.
Let’s take a look at how much money you’ll have saved by each important milestone. While this isn’t a quit-smoking savings calculator, this can help you have a grasp on your possible savings by kicking the habit.
One Day Not Smoking
How much can you save by not smoking for just a day? You’ll have an extra $35 in your pocket.
You could take yourself out for lunch or treat yourself to a small houseplant for your home.
You’ll even be able to notice health benefits just 24 hours after quitting. Your blood pressure and heart rate return back to normal levels, and the circulation in your hands and feet improves.
The carbon monoxide levels in your body reduce, and the oxygen levels in your blood level out again. Your risk of heart attack already decreases.
Two Days Not Smoking
Two days after quitting, you’ve saved $70.
Why not go out for a delicious dinner to celebrate? Alternatively, you could purchase a bouquet of fresh flowers.
At this point, your body has cleared itself of nicotine and carbon monoxide. Your lungs are also beginning to function properly again as the cilia regain function.
At your celebratory dinner, you might notice your sense of taste and smell have improved. This is because the nerve endings in your nose and mouth — that were damaged by the chemicals in cigarettes — have begun to heal.
One Week Not Smoking
At the one week mark, you’ve saved $245.
Head out for a luxurious massage, purchase concert tickets, or buy a new item of clothing!
This is certainly a milestone to note — smokers who make it one week without smoking are nine times more likely to successfully quit. You’re well on your way!
One week in, your nicotine withdrawal symptoms will begin to reduce in intensity. You may notice less cravings and improved mood.
The antioxidants in the blood, such as Vitamin C, also increase at this point.
Two Weeks Not Smoking
Two weeks into quitting and you’re $490 richer than you would have been had you smoked.
You could splurge on a night away in your city, or pick up some new airpods.
As for the health improvements, you’ll notice you can breathe a little easier because the air sacs in your lungs are beginning to relax and produce less mucus.
One Month Not Smoking
After 30 days without smoking, you have held onto an extra $1,050.
You could purchase a new TV or head interstate for a weekend away.
You may notice the appearance of your skin has improved, with less yellowing around your fingernails in particular.
Cigarettes tend to irritate the sinuses, so you’ll likely notice any sinus issues or congestion begins to clear.
Additionally, your lungs are in full-blown healing mode, meaning you’ll be able to breathe easier and exercise more intensely.
Three to Six Months Not Smoking
At the three month mark, you’ve saved $3,150. You could treat yourself to a new Macbook with that cash.
After six months, you’ve got an extra $6,300 in the bank. Fancy a trip to Fiji?
Your body is now much better at recovering from wounds and infection, and you’ll likely experience improved moods and less stress.
At this point, any lingering coughing should subside.
After One Year Not Smoking
One year after quitting, your body and finances are much healthier.
You will have saved a total of $12,775 over the year. You could buy some new furniture, head on a trip around Europe, or put some money towards a house deposit.
You can also rest easy knowing you’ve made the best choice for your body.
Your risk of diabetes and certain cancers — including liver, stomach, colon, rectum, and pancreatic cancer — have reduced significantly.
Plus, your risk of coronary heart disease is half of what it was when you were smoking.
Smoking Will Continue to Hit Your Hip Pocket
The cost of cigarettes in Australia has steadily increased since the 1990s, a trend we can expect to see continue in the coming years.
Excise taxes are largely responsible for the price hike, and the Federal Government has promised to increase taxes and costs in a bid to drive smoking rates down below 10% or more by 2025.
This could see pack-a-week smokers spending $33,605 to about $45,000 on the habit annually.
The financial and health burden of smoking cannot be understated.
It’s important to note that while quitting presents a range of significant challenges, there are a number of tools, strategies, and resources designed to help you along your journey.
Here’s how to go about it.
Consult a GP
GPs can guide you through the best practices and the most effective path throughout. GPs have helped numerous quitters to stop smoking with tailor-made smoking cessation programmes.
If you don’t have time to personally see a local GP, you can book a bulk-billed telehealth consultation with a GP who can create your stop-smoking plan. GPs may prescribe NRT tools to help you manage your withdrawals – an important component of any quit journey.
However, GPs also know that NRT products might not be enough to keep your cravings and withdrawals at bay. They may decide to prescribe pharmacy NVPs as a second means to help you stop smoking for good.
More About NVPs
Based on your GP’s evaluation, after NRTs prove to be ineffective, they can prescribe NVPs to help you quit. NVP products sold in pharmacies are made under stringent pharmaceutical standards on the manufacturing process and ingredients, are toxicologically assessed for inhalation, are locally insured, and are specifically designed to help you stop smoking.
The latest Cochrane Review found high-certainty evidence that NVPs are more effective than NRTs in helping people stop smoking.
The cost of smoking isn’t really worth paying for in terms of health and wealth. Prices for a single 20s pack will likely reach the same amount as your utility bills at the rate taxes are moving, so the best way to save more cash for college fees, savings, and emergencies is to stop smoking for good.
We know you’re reading this because you want to know if it’s worth paying the cost of smoking. It isn’t, and we can help you quit entirely.
Smokefree Clinic gives you access to many medically reviewed and trustworthy resources that can inform and aid you in your path to wellness, so have a look around!
If you’re ready to get started, Smokefree can connect you to bulk-billing Australian healthcare professionals who excel in helping patients quit smoking for good, including using responsible vaping products where appropriate.
Click here to book your bulk-billed telehealth consultation with an Australian healthcare professional and quit smoking today.