The federal government has eased concerns it was about to plunder the superannuation savings system to help plug financial holes in the budget.
But Treasurer Chris Bowen is targeting cigarette smokers - with hopes of getting billions of dollars in extra taxes from them.
Mr Bowen says a tax hike on cigarettes is good for Australia's health but acknowledges the government will also benefit from the substantial extra revenue generated by the move.
Labor says it would raise the cost of cigarettes by 12.5 per cent a year for the next four years in a measure expected to raise more than $5 billion.
It would be much needed revenue for Labor as it searches for cuts ahead of its pre-election economic statement expected to show another budget revenue shortfall of around $20-billion.
Mr Bowen says the move would be a win for the budget, and for the health of Australians.
"This is a decision which makes a contribution to returning the budget to surplus in 2016-17. But even more importantly it's a decision which has a big impact on the health of Australians. We look closely at this, we look closely at the evidence. Last time there was an increase in the tobacco excise it led to a reduction in smoking of 11 percent."
The first increase takes effect from December this year, with further increases under a re-elected Labor government in September 2014, 2015 and 2016.
Opposition Leader Tony Abbott says the tax increase is nothing more than a grab for cash that's all about the Prime Minister Kevin Rudd running out of taxpayers' money.
"Know what this is. This is just another tax. The government is promoting this as some kind of a health measure. Wrong. It's a revenue measure. It's just another tax. It would only be raising five billion dollars or so if people are to continue to smoke. So let's not listen to this palaver about health. This is all about revenue. It's all about tax. It's all about a government that can't control its spending. That's why it hits you in the hip pocket."
But the Multicultural Health Communications Service says the measure would have a positive affect for many at risk groups.
It says Arabic-speaking, Chinese and Vietnamese communities are particularly at risk of smoking-related disease - with smoking rates ranging between 20 and almost 40 per cent.
Indigenous communities also have much higher smoking rates than in the general Australian community - of up to 80 per cent.
Michael Camit from the Multicultural Health Communications Service thinks the tax increase will encourage more people from diverse cultural backgrounds to give up smoking.
"Absolutely. I think despite a success in Australia, we're one the countries where smoking is in decline, there are still pockets or segments in the population from a multicultural background that are above average rates. What we know from our research in health and migrants is they look at what's the community norm. That's also structural. I mean obviously the price is a big driver especially for people who are starting out. And again we have seen that when we run campaigns where we looked at the benefit of quitting smoking. It's not just health but also you can save money. So that we think is a very good move by the government."
Even if the federal government was to receive more than $5-billion from the tobacco tax increase, it would still need to find around $14-billion more to fund increased spending on sending asylum seeker policy and other measures.
It has ruled out making changes to the superannuation tax system to raise revenue for the next five years but is not ruling out further cuts to the public service and more tax increases.
The economic statement will detail those measures which could include a tax on bank deposits.
Labor strategists say the economic plan will complete the four pre-election tasks Mr Rudd set himself, following earlier initiatives on carbon pricing, Labor Party reform and asylum seeker policy.
But the Prime Minister, who is meeting daily with Labor's campaign strategy group, has yet to announce an election date.
