The $5.3 billion tax increase on smokers over the next four years will be among the biggest new measures in the federal government’s economic statement, Treasurer Chris Bowen has confirmed.
The government announced on Thursday it will introduce staged 12.5 per cent increases in tobacco excise over the budget forward estimates starting on December 1.
They are selling it both as a health measure and a help towards returning the budget to surplus in 2016/17.
Bowen and Finance Minister Penny Wong are putting together an update of the May budget expected to be released within days.
Bowen said the tobacco tax hike will be a substantial measure in the statement.
“In terms of revenue impact, it will be one of the biggest measures,” he told reporters in Sydney.
He said the statement would also show all the costs of the government’s asylum seeker resettlement plan with Papua New Guinea including aid, development, construction and operational costs, in an “open and transparent” way.
He called on the opposition to do the same about their Nauru proposal.
“Of course they won’t be bringing down their economic statement before the election,” he said.
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“They have torn up the Charter of Budget Honesty in what I believe is an act of vandalism, walking away from the legacy of (former Liberal treasurer) Peter Costello and really trying to pull a swifty when its come to their costings and their impact on budget bottom line.”
Shadow treasurer Joe Hockey has described the tobacco tax hike as a “cash grab”.
He told ABC radio that he wouldn’t be surprised if the government hit the banks with another tax next.
“This is the Labor way, they create some great moral outrage and then they increase the cost of living with their taxes,” he said.
Bowen said the government had no plans to tax the banks, but he was in regular consultation with them in relation to financial regulation and financial services, and about recommendations that have been made by the financial regulators.
