7.4 Tax as a percentage component of retail price, total tax paid per 20 cigarettes, and final retail price -- international comparisons

7.4.1 Trends in retail prices, recommended and actual

Price lists containing recommended retail price of cigarettes sold in Australia have been published by the NSW Retail Tobacco Traders Asdsociation since at least 1948. A selection of prices are listed in Table 7.8.

Table 7.9 Recommended retail prices of leading cigarette brands in Australia, 1948 to 2000, selected years, $ current
Year	Typical brand	Price per stick	Year	Leading brand	Price per stick
1948			1990	Winield 25s
1950			1991	Winield 25s
1955			1992	Winield 25s
1960			1993	Winield 25s
1965			1994	Winield 25s
1970			1995	Winield 25s
1975	Winield 25s		1996	Winield 25s
1980	Winield 25s		1997	Winield 25s
1985	Winield 25s		1998	Winield 25s
Source: Australian Retail Tobacconist 46

When one takes infaltion into account, it is apparent that recommended retail prices of cigarettes changed very little until the 1980s when state licence fees started to become more substantial - refer Figure 7.3. The large increases apparent in the 1990s corresponded with further increases in state tobacco licence fees and real increases in excise duty - as portrayed in Figure 7.1 above.

Figure 7.3 Recommended retail price of leading cigarette brands in Australia, 1948 to 1998, $89-90

7.4.2 Effects of large pack sizes on retail prices

While the state licence fees had an impact on the brands popular until the 1970s, the tobacco industry fought back to retain its customers.

Cigarettes in the early part of the century were commonly sold in packets of ten or twenty or in tins of 50. These were similar in size to the tins in which loose tobacco was commonly sold. With the advent of plastic wrapping however, these tins disappeared and by 1960 the vast majority of cigaretees were sold in packets of 20. This remained the case until the advent of Windfield 25s "5 smokes ahead of the rest", in 1976.

7.4.3 Affordability of cigarettes - recommended retail prices compared to income

7.4.4 Recommended versus actual retail prices

While many retailers sell cigarettes at the recommended prices, the majority of cigarettes in Australia are sold at considerably lower prices. In its 1994 report on the cigarette industry, the Prices Surveillance Authority noted various forms of discounting common in the industry, including lower prices for stock bought in high volumes, and the phenomenon of "specialling" where manufacturers encourage high volume retailers (especially tobacconists and supermarkets) to discount one or two of the company's brands for a week or longer periods.

No data on the extent of discounting has ever been available to public health specialists until a study undertaken throughout 1997-98 by the Centre for Behavioural Research in Cancer.

Measured by international standards, Australia is a relatively low taxing country compared with many industrialised nations.

Table 7.12: Tax as a percentage component of retail price, total tax paid per 20 cigarettes, and final retail price - international comparisons
Country	Tax (%) ø	Tax ($US) Ý	Price
Denmark	82	3.63	4.44
United Kingdom	79	4.34	5.51
Ireland	77	3.36	4.35
Finland	76	3.11	4.08
France	75	2.46	3.27
Sweden	76	4.36	5.73
Italy	75	1.58	2.12
Belgium	74	2.15	2.89
Germany	69	2.06	2.97
Canada (highest province)	69	2.79	4.04
New Zealand	71	2.36	3.31
Australia ß	64	2.13	3.32
Canada (lowest province)	54	1.17	2.17
US (highest state)	50	1.50	3.02
US (average)	34	0.71	2.06
ø Estimated as of June 1998 Ý Based on exchange rates June 1998 ß At June 1998 Source: Canadian Non-Smokers Rights Association

Expressed as a percentage of final retail price of a packet of cigarettes, and in terms of tax per pack of 20 cigarettes sold, Australia ranks behind the UK and several other European countries, Canada and New Zealand(50,51) (Table 7.10). The low taxing status of the US has changed somewhat under the presidency of Mr Bill Clinton, who early in his first term, signalled an intention to increase tobacco taxes, probably as a means of helping meet the nation's healthcare costs.(52)