This bill became law on Jul 9th, 2024.
Budget, tax & economy
The law cancels any tobacco indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. worked out under the old rules during the changeover and replaces it with indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. under the new higher-rate formula.
Higher tobacco duty was already being collected from 1 September 2023, but the law needed to lock in those increases and stop indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. from reducing rates during the changeover. The bill makes those higher rates legal, adds extra annual increases, and tightens how loose tobacco is taxed so it better matches cigarettes.
Australia already taxed tobacco and indexed those rates to wages, but in the 2023-24 Budget the government decided to push prices higher as part of the National Tobacco Strategy and then had to use tariff proposals so the extra duty could start being collected from 1 September 2023 straight away. This bill later wrote those higher rates into law, stopped old indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. rules from cutting them during the transition, and tightened the weight formula for loose tobacco so it was taxed more like cigarettes, with Parliament passing the changes in June 2024 and Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament. following in July.
The main criticism was that higher tobacco excise could push more smokers into black-market tobacco, strengthening organised crimeThe criminal networks critics say may benefit if higher tobacco taxes push more sales into illegal markets. while hurting legal small retailers and doing little to stop addiction. That concern was raised most directly by Malcolm Roberts and echoed, despite overall support for the bill, by Coalition speakers including Barnaby Joyce, Jason Wood, Susan McDonald and Pat Conaghan.
Stephen Jones MPA person elected to Parliament; the page uses this title for ministers and speakers such as Stephen Jones MP. introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 09 July 2024
Final passage
Passed without a counted vote
Members called out ‘aye’ or ‘no’ — no individual votes were recorded.
Passage speed
111 days
From introduction to the latest recorded parliamentary step
Meaning
The law cancels any tobacco indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. worked out under the old rules during the changeover and replaces it with indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. under the new higher-rate formula.
Tobacco excise rises by an extra 5 per cent each year for three years from 1 September 2023, on top of the usual wage-linked indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages..
Tobacco excise cannot be reduced by indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. on 1 September 2023, 1 September 2024 or 1 September 2025 if the formula would otherwise push it below the current rate.
Loose tobacco and other tobacco taxed by weight face progressively higher duty as the law lowers the amount treated as one cigarette’s tobacco content from 0.7 grams to 0.6 grams by 1 September 2026.
The higher tobacco excise changes legally apply from 1 September 2023, so the law matches the higher duty already being collected from that date.
To avoid any legal uncertainty, these Bills contain transitional provisions to treat any indexation that occurs from 1 September 2023, and before the commencement of the Bills, as of no effect. Instead, the indexation at the lower rate that would have occurred is replaced with the indexation at the higher rate, as provided for in these Bills.Excise Tariff Amendment (Tobacco) explanatory memorandum
These Bills increase the excise duty for all tobacco goods and customs duty for all tobacco products by five per cent per year for three years starting from 1 September 2023. The five per cent increase is in addition to the current biannual indexation based on the AWOTE.Excise Tariff Amendment (Tobacco) explanatory memorandum
(5) Despite subsection (3), treat the indexation factor for 1 September 2023, 1 September 2024 and 1 September 2025 as 1 if, on that day, it would otherwise be less than 1.Excise Tariff Amendment (Tobacco) Act 2024 final Act text
will also align the tax treatment of tobacco products subject to the per kilogram excise and excise-equivalent customs duty (such as roll-your-own tobacco) with the manufactured per-stick rate, by progressively lowering the ‘equivalisation weight’ from 0.7 to 0.6 grams. These progressive decreases will occur on 1 September each year from 2023, with the new weight coming fully into effect from 1 September 2026. This will raise the per kilogram duty accordingly.Excise Tariff Amendment (Tobacco) explanatory memorandum
The Excise Tariff Amendment (Tobacco) Bill 2024 and the Customs Tariff Amendment (Tobacco) Bill 2024 are taken to have commenced on 1 September 2023. This ensures that the amendments retrospectively take effect on and from 1 September 2023, which is the day that the Customs and Excise Tariff Proposals facilitated the collection of duties at the higher rate. The retrospective application of the amendments does not adversely affect duty payers as they have been paying duty at the rate imposed under the amendments as a result of the application of the Tariff Proposals from 1 September 2023.[Excise Tariff Amendment (Tobacco) Bill 2024, clause 2; Customs Tariff Amendment (Tobacco) Bill 2024, clause 2]Excise Tariff Amendment (Tobacco) explanatory memorandum
Context
Australia already taxed tobacco and indexed those rates to wages, but in the 2023-24 Budget the government decided to push prices higher as part of the National Tobacco Strategy and then had to use tariff proposals so the extra duty could start being collected from 1 September 2023 straight away. This bill later wrote those higher rates into law, stopped old indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages. rules from cutting them during the transition, and tightened the weight formula for loose tobacco so it was taxed more like cigarettes, with Parliament passing the changes in June 2024 and Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament. following in July.
Government says the Budget will include new tobacco tax increases
The government announced before the 2023-24 Budget that it would include measures to reduce smoking and vaping, including higher tobacco duty linked to the National Tobacco Strategy 2023-2030The government policy framework behind the tobacco tax rises, aimed at reducing smoking and vaping..
Excise Tariff Amendment (Tobacco) explanatory memorandum ↗Tariff proposals are tabled to apply the higher duty
Excise and customs tariff proposals were tabled so the Commissioner of Taxation and Comptroller-General of CustomsThe head of Customs who collects duty on imported tobacco under the tariff proposals. could lawfully collect tobacco duty at the higher rates before the bill passed.
Excise Tariff Amendment (Tobacco) explanatory memorandum ↗Higher tobacco duty starts being collected
The extra 5 per cent annual increases began from this date on top of normal indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages., with transitional rules later needed so the old formula could not reduce rates during the changeover.
Excise Tariff Amendment (Tobacco) explanatory memorandum ↗Government introduces the bill to lock in the increases
The Assistant Treasurer told the House the bill would increase tobacco tax by 5 per cent for three years, in addition to ordinary indexationA regular tax adjustment that changes the rate using a formula, here mainly to track wages., to help cut smoking-related death and disability.
Hansard ↗Parliament passes the bill
Both houses passed the bill, completing legislation that retrospectively validated the higher duty from 1 September 2023 and aligned loose tobacco more closely with cigarette taxation.
Parliamentary timeline ↗Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament. makes the higher tobacco rates law
Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament. turned the bill into an Act, confirming the higher tobacco duty already being collected and the staged reduction in the loose-tobacco weight conversion factorThe number used to treat loose tobacco as the equivalent of a set amount of cigarette tobacco, which the bill lowers over time. through to 2026.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The bill reached this recorded parliamentary step.
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The bill reached this recorded parliamentary step.
Reported from Federation Chamber
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament., turning the bill into an Act.
Key criticism
The main criticism was that higher tobacco excise could push more smokers into black-market tobacco, strengthening organised crimeThe criminal networks critics say may benefit if higher tobacco taxes push more sales into illegal markets. while hurting legal small retailers and doing little to stop addiction. That concern was raised most directly by Malcolm Roberts and echoed, despite overall support for the bill, by Coalition speakers including Barnaby Joyce, Jason Wood, Susan McDonald and Pat Conaghan.
Most criticism was conditional and focused on enforcement and market effects, not the goal of cutting smoking.
Illegal tobacco market growth
Critics argued another excise increase would shift more sales to illegal tobacco, undermining the policy and giving organised crimeThe criminal networks critics say may benefit if higher tobacco taxes push more sales into illegal markets. a larger market.
Harm to legal retailers and low-income smokers
Opponents and hesitant supporters said the tax rise would fall hardest on poorer smokers and legitimate small businesses, while illegal sellers avoid the burden.
Enforcement matters more than higher tax
Several speakers said the bill would not work as intended unless governments strengthened policing, penalties and coordination against illicit tobacco instead of relying mainly on tax rises.
Further sources
Votes
The bill passed both chambers on the voices, so there is no list of individual Aye and No votes for final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill, saying the tobacco tax increase is part of Labor's strategy to cut smoking rates and reduce tobacco-related deaths and illness.
Read in Hansard ↗Roberts opposes the bill, arguing that another tobacco tax rise will push more sales into the black market and hand more money to organised crimeThe criminal networks critics say may benefit if higher tobacco taxes push more sales into illegal markets..
Read in Hansard ↗Barnaby Joyce says he will support the bill, but argues that higher tobacco tax will mostly hit poor smokers while pushing more people into the illegal tobacco market.
Read in Hansard ↗Graham Perrett supports the bill and says the tobacco tax rises are part of Labor's fight against vaping and smoking.
Read in Hansard ↗All speeches by bloc
4 speakers · 4 support
“So today I'm pleased to support the Excise Tariff Amendment (Tobacco) Bill 2024 and the Customs Tariff Amendment (Tobacco) Bill 2024. These bills will increase the excise and customs duty on tobacco goods by five per cent per year for three years, in addition to the ordinary biannual indexation. These amendments cannot come soon enough when it comes to the scourge of vaping. Labor is taking on the tobacco industry so it cannot succeed in getting a new generation addicted to nicotine.”Read the full speech in Hansard ↗
“This Bill amends the Customs Tariff Act 1995 to raise the customs duty on excise-equivalent tobacco goods by 5 per cent each year for 3 years and to align the customs duty rate for tobacco goods subject to the 'per kilogram' rate with the customs duty rate applying to the average per stick tobacco content of cigarettes, progressively over 4 years. These amendments support the Excise Tariff Amendment (Tobacco) Bill 2024.”Read the full speech in Hansard ↗
“This legislation will increase the tax on tobacco by five per cent for three years, in addition to the ordinary annual indexation.”Read the full speech in Hansard ↗
“These bills also align the excise and customs duty rate for tobacco goods subject to the per kilogram rate, with a duty rate applying to the average per stick tobacco content of cigarettes. This alignment will be implemented progressively over four years, from 1 September 2023, ensuring all tobacco products generally have equivalent tax treatment regardless of their form. These changes support the National Tobacco Strategy, in line with the government's aim of continuing to reduce tobacco consumption.”Read the full speech in Hansard ↗
4 speakers · 3 support · 1 unclear
“Yes, okay, I'm supporting this. But I'm flagging this: we've got to stop going back to poor people and belting them up even more, while still thinking it's virtuous to belt them up—that there's a morality in belting them up—and that it's probably A-OK to put that money in the sky rocket of the federal government.”Read the full speech in Hansard ↗
“Can I just say: organised crime is involved in this. They always just follow the money, and the simple way to do it is to take the incentive away. You take the incentive away by going after those illegal operators with very tough penalties, then you take away the market. Sadly, that hasn't happened, and that's what we're getting down in Victoria. I'll leave it there.”Read the full speech in Hansard ↗
“Increasing duties on tobacco also increases the end-cost of tobacco products. While these price increases typically reduce overall rates of smoking, they can also push customers to seek out black- or grey-market substitutes at a lower price. These increasingly punish small businesses who do the right thing and don't sell those illegal products. It is essential that this be countered through greater enforcement, and these issues prompted the creation of the Illicit Tobacco Taskforce under the previous coalition government of 2018.”Read the full speech in Hansard ↗
“I commit the bills to the Senate.”Read the full speech in Hansard ↗
1 speaker · 1 support
“I reaffirm that the Australian Greens will support this bill in the Senate.”Read the full speech in Hansard ↗
1 speaker · 1 oppose
“I must ask: how did Border Force fail to intercept 2.6 million kilograms of tobacco? Clearly this government has a problem enforcing the laws it already has. Now it wants to make matters worse. The vaping ban has already moved 87 per cent of vape users across to illegal vapes. While yesterday's brief moment of partial sanity will help that figure, it must surely be clear now that more taxation and prohibitions are futile and counterproductive. Here's a better idea: the government should spend less, tax less, and let everyday Australians and businesses get on with their lives.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Referred to Federation Chamber
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Reported from Federation Chamber
Reported from Federation Chamber
The bill reached this recorded parliamentary step.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
Senate · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Senate · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal AssentThe formal step that turns a bill passed by Parliament into an Act of Parliament., turning the bill into an Act.
