Australian spending on tobacco goes up in smoke

SYDNEY, June 5 (Reuters) – Australian spending on tobacco has tumbled to its lowest since at least 1959, a clear sign that ever rising taxes and laws forcing plain packaging on cigarette companies are pushing people off the habit.

When adjusted for inflation, just A$3.1 billion ($2.3 billion) was spent on tobacco products in the March quarter. That amounts to less than A$132 for every Australian, slim pickings in a country where a packet costs upwards of A$22.

Spending was down 10 percent on the same quarter last year and a long way from smoking heyday’s of the 1980s when Australians routinely spent more than A$7 billion a quarter.

Even going back to 1959, when the Australian Bureau of Statistics’ figures on household spending started, the country used to fork out over A$5 billion a quarter on tobacco.

The decline in tobacco use has clearly gathered pace since Australia became the first country in the world to force manufacturers to strip all branding from cigarette packets, most of which are now sold over the counter from blank fronted cabinets.

Since the law went into effect in late 2012, spending has dropped 16 percent in real terms.

Indeed, the law might be proving so effective that the government is steadily losing one of its most reliable sources of tax revenue, at a time when budget deficits loom for years to come. The tax rate on tobacco is about 60 percent. (Reporting by Wayne Cole; Editing by Jeremy Laurence)

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