Tobacco franchise fee to be increased

28/7/93

The State Government has moved to end interstate profiteering in tobacco by bringing Western Australia's tobacco franchise fee in line with that levied in South Australia and Tasmania.

Announcing the increase today, Finance Minister Max Evans said interstate traders had taken advantage of WA's low tobacco fee by buying tobacco products in WA for sale in other States.

The Minister said on both financial and moral grounds, Western Australia could no longer levy the nation's lowest tobacco fee.

From August 1, the fee, which applies to the wholesale price, will increase from 50 per cent to 100 per cent, equal to South Australia and Tasmania and ahead of the 75 per cent fee charged in the other States.

The lift in the rate has the support of the Australian Medical Association, the Australian Council on Smoking and Health and public health specialists as a means of reducing tobacco-related health problems.

Mr Evans said the cost of a packet of 25 cigarettes now retailing at about $3.83 would increase by $1.06 to $4.89, but said retailers should only increase prices when existing supplies had been sold.

The Minister added that he hoped the increase would result in as little extra revenue as possible, saying that the Government would prefer on health grounds to see Western Australians giving up smoking in droves.

Indications are that the increase will result in a 15 per cent fall in consumption and the Government is budgeting for tobacco fee revenue of $185 million this year and $194 million in a full year.  These are increases of $45 million and $54 million respectively over what would have been expected had the fee remained unchanged.

Media contact: Tony Barker-May 481 3244