2.2 Dutiable tobacco products as an estimate of tobacco consumption

Show / hide chapter menu

The most widely used estimate of tobacco consumption is that provided by duty-paid clearances of Australian-made and imported tobacco products destined for sale in Australia.

Excise duty is paid on cigarettes produced in Australia but not destined for export. Customs duty is paid on cigarettes imported for sale in Australia.

Tobacco products produced in or imported into Australia over the years have included

• smoking tobacco in the form of either
• loose tobacco purchased by smokers to make roll-your-own cigarettes or
• pipe tobacco
• factory-made cigarettes containing tobacco[7]
• cigars which include large, standard and small cigars[8]
• smokeless tobacco including41
• chewing tobacco sold in pouches in the form of long strands of loose leaves, plugs, or twists of tobacco that, when used, are commonly called 'plugs,' 'wads,' or 'chew'[9] and
• snuff, a fine ground tobacco that comes in cans or pouches and can be dry or moist.[10]

Smokeless tobacco has been prohibited for sale in Australia since 1991,[11] but small quantities are imported by individuals for personal use.43 See Chapter 16 for further details.

2.2.1 Total tobacco product on which duty was levied

Table 2.3 shows the total weight of tobacco products on which duty was levied in Australia for cigarettes, cigars and other tobacco product for selected years since data was first collected shortly after federation and passage of the Excise Act 190144 and the Customs Act 190145, and then in each year from 1969–70 to 1998–99.46

The dutiable weight was based on the total dry weight of the cigarette or other tobacco product: that is, it was adjusted for moisture content.[12] It included the weight of cigarette paper and the filter but excluded the weight of packaging.

In 1999, following extensive lobbying by health groups, the manner in which excise was calculated was changed from the weight of cigarettes (with adjustment for moisture content and including filters and paper) to the number of sticks per pack—see Section 13.3 for further details. Smoking tobacco including pipe tobacco and loose pouch tobacco used for roll-your-own cigarettes continued to be taxed by weight. The very small proportion of cigarettes and the very large proportion of cigars produced or imported that weighed more than 0.8 grams were also still taxed by weight, excluding the weight of the filter. While estimates of the weights of cigarettes produced in recent years are available48, these are based on weight without any adjustment for moisture content. Thus, data from this more recent period listed in Table 2.4 are approximations only and not readily comparable with data from the period prior to 1999.[13]

The total amount of tobacco dutied in Australia rose steadily after World War I, peaked in the mid-1970s and declined steadily over the last 25 years of the century.

While the weight of tobacco products on which excise and customs duty appears to have dropped between 1998–99 and 2000–01, the total weight seems to have remained fairly steady since that time.

2.2.2 Tobacco products dutied per capita

Table 2.5 sets out the amounts of each sort of tobacco product for which duties were levied in Australia for selected years between 1910 and 1999, divided by the number of people recorded in the same year as being aged 15 years or older.

Once again, Figure 2.3 plots the total data per capita at 10-year intervals.

Cigarettes have represented an increasing share of the total amount of tobacco on which excise and customs duty have been levied since 1910, with cigarettes exceeding other forms of tobacco products since 1955.

Table 2.6 shows the total weight of tobacco products on which duty was levied, divided by the total number of Australians aged 15 and over for the final (financial) year of each decade from 1910 to 1940, five-yearly from 1944–45 to 1969–70, and then annually until 1998–99.

Per capita tobacco consumption has varied over the years, with lower use due to economic hardship during the Depression and shortages of tobacco stock during the world wars. It increased sharply after World War II and remained steady over the 1960s and in the early 1970s corresponding with increased uptake by young women—see Chapter 1, Section 1.2. It then started to decline following increased publicity about the health effects of smoking and adoption of various tobacco control policies commencing with the phasing out of cigarette advertising on television and radio in the mid-1970s—see Section 2.10 for further discussion.

Table 2.7 shows the numbers of cigarettes dutied per capita since 2000–01, and estimated numbers for 1997–98 and 1998–99.

Per capita consumption of cigarettes appears to have fallen sharply between 1999 and 2001—see also Section 2.5 and Chapter 13—but fell only very slightly between 2001 and 2005.

2.2.3 Tobacco products dutied per smoker[14]

Clearly, consumption of tobacco products across the total population has declined steadily over the past 30 years. But what about those who continue to smoke? Given the amount of tobacco on which duty is levied in Australia each year, how many cigarettes and other tobacco products must be being consumed each day, on average, by each person who smokes, and how is this changing over time?

The previous edition of Tobacco in Australia: Facts and Issues included estimates of the average annual numbers of cigarettes consumed for years in which survey data provided estimates of the numbers of regular smokers in Australia.54 p 25 Using limited data available on average weights of cigarettes in each of the years, it was estimated that the number of cigarettes consumed per adult smoker, per day, increased from about 17 in 1964 to about 27 in 1992.[15]

Increased consumption during the 1970s and 1980s is thought to be attributable to:

• rising levels of affluence and disposable income during the 1950s and 1960s, with little increase in the real price of tobacco products, resulting in cigarettes becoming more affordable—see Chapter 13 Section 13.3
• progressive increases in the proportion of smokers using factory-made cigarettes, much more convenient to smoke than roll-your-own and other tobacco products
• more pervasive advertising of tobacco products in the 1960s and early 1970s after the introduction of television in Australia and before the restriction of broadcasting of tobacco advertisements, resulting in more frequent triggers to think about cigarettes and to light up
• earlier average age of uptake than in previous decades, and consequently heavier lifetime use, particularly among women
• lower nicotine levels in cigarettes corresponding with greater market demand for cigarettes labeled 'low tar' and thought to be less dangerous, compelling smokers to smoke more cigarettes to maintain blood nicotine levels similar to those they became used to before switching to lower-tar brands
• the growing trend to smaller, lighter cigarettes that were faster to smoke
• the shift to larger and larger pack sizes which resulted in cheaper cigarettes and additional increased consumption among those smokers who tend to calibrate the number of cigarettes they smoke to take account of the number they have left in
  the pack.

Without accurate estimates of the average weight of cigarettes in 1995 and 1998, it is difficult to extend this analysis of consumption per smoker over the 1990s, however the change to a per stick system of levying duty on tobacco products in November 1999 enables analysis of trends in the early part of the 2000s. Table 2.8 shows the average number of cigarettes that must have been consumed each year and each day by those people who could be described as regular smokers in 1998, 2001 and 2004.[16]

Based on customs and excise receipts for cigarettes and smoking tobacco combined, estimated weekly consumption of cigarettes among remaining smokers appears to have declined significantly between 1998 and 2001 and then increased again between 2001 and 2004. Compared to 1998–99, in 2004–05 an estimated 4% fewer cigarettes were consumed by remaining smokers. Note that consumption per smoker could increase either because remaining smokers increased consumption or because those people who quit tended to smoke fewer cigarettes on average than those who continued smoking or due to a combination of both. Consumption estimates based on excise receipts over this period would also have been affected by changing levels of use of chop-chop and other illicit products—see Section 2.8.