Cigarettes slapped with 25% tax hike

Smokers will pay 25 per cent more for their cigarettes from midnight, after the
federal government announced the first tobacco tax hike in more than a decade.
Prime Minister Kevin Rudd said Australian Tax Office reports that smokers - fearing
a price rise - had begun stockpiling cigarettes prompted him to go public with the
plan.
Labor's carcinogen crackdown will push up the price of a pack of 30 cigarettes by
$2.16 to about $15, while tobacco companies will have to use plain packaging from
July 1, 2012.
"This is a tough decision for the government," Mr Rudd told reporters in Sydney.
"The big tobacco companies will hate what we're doing.
But the government was making no apology "whatsoever".
Mr Rudd said the changes would cut tobacco consumption by six per cent and the
number of smokers by two or three per cent - about 87,000 Australians.
The extra $5 billion over four years generated from a tobacco tax hike will help
fund the government's public health and hospital reforms.
Health groups have welcomed the move, but cigarette companies are already preparing
to legally challenge it.
"Introducing plain packaging just takes away the ability of a consumer to identify
our brand from another brand - and that's of value to us," Imperial Tobacco
Australia spokeswoman Cathie Keogh told ABC Radio.
"It really affects the value of our business as a commercial enterprise and we will
fight to support protecting our international property rights."
Intellectual property and free-trade expert Tim Wilson, from the Institute of Public
Affairs, said the move could cost taxpayers $3.4 billion a year in compensation to
tobacco companies.
"Stripping intellectual property from products is akin to stripping someone of their
physical property and requires compensation," he said.
Meanwhile, national IGA supermarkets board chairman Mick Daly said the tax hike was
contemptuous to small businesses and smokers alike.
"It's a lazy policy response being pushed by some health advocates," he said.
"That amounts to a direct attack on approximately 16 per cent of Australians who
have made legal and legitimate lifestyle choices."
However, the head of the government's preventative health taskforce said there would
be one million fewer smokers by 2020 if measures such as plain cigarette packets
were implemented.
Professor Rob Moodie said he did not believe tobacco companies would be entitled to
compensation either.
"It's a solid case on constitutional and legal grounds," he said, rejecting
suggestions easy-to-copy plain packets would be a boon for dodgy cigarette
counterfeiters.
Opposition health spokesman Peter Dutton accused Labor of sitting on a report
recommending the step for 10 months, and had only moved now to win community favour.
"It doesn't surprise me that these sort of distractions are released in the run up
to a Newspoll weekend, at a time when the government needs to distract people's
attentions away from their failings," he told ABC Radio.
The government has been in the firing line of late, its botched home insulation
program, shelved emissions trading scheme and refusal to build hundreds of new
childcare centres provoking ire from punters and pundits.