The government has announced that the 2016 budget will contain a 12.5 per cent annual increase in tobacco excise over four years to 2020.
This measure has been welcomed by Indigenous anti-smoking advocates, but the National Coordinator for the government’s Tackling Indigenous Smoking Initiative, Tom Calma, also recognises the economic impact this may have on Indigenous communities.
“It’s a reality that [a tobacco tax excise] does have an economic impact on smokers and we do know that Aboriginal people in communities have a higher incidence of smoking, and also maybe a greater reliance on government support,” says Dr Calma.
Latest figures show Indigenous people are 2.6 times as likely as the rest of the population to smoke.
While the effect of taxation and pricing changes has not been extensively evaluated for Aboriginal and Torres Strait Islander people, some studies have shown that it may result in increased hardship for smokers who don’t give up smoking.
A 2010 study by Dr David Thomas, the head of Tobacco Control Research program at the Menzies School of Health Research, showed conflicting findings regarding the impact of a taxation increases of tobacco on Aboriginal people in remote Northern Territory communities.
Dr Thomas says a later study on the impact of tobacco tax increases in remote Indigenous Australia showed small gains in reducing smoking but high levels of support.
“We did a small research project with 18 stores and takeaways in remote communities a few years ago and found only a very modest reduction in sales of tobacco in those stores after the 2010 increase in the tax excise,” he says.
"But more importantly we actually talked to those people in those communities and we found consistent support for increases in tax rises as part of a broader effort to reduce smoking."
Dr Calma says the economic impact is not a valid argument against the tax hike, pointing to the dual health and economic benefits of giving up smoking.
“The excise is a good initiative in the general campaign against reducing smoking,” says Dr Calma.
“Anecdotally we hear that there are people who do give up because of the cost. We also know that each time there is an increase there are increased numbers of contacts with Quitline, and we anticipate that will be the same this time.”
International evidence shows tobacco excise works
Dr Thomas also points to the strong evidence overseas regarding the effectiveness of a tobacco excise.
“The international evidence is very conclusive,” says Dr David Thomas, the head of Tobacco Control Research program at the Menzies School of Health Research.
“In every setting it is quite clear that tobacco tax excises and therefore the increase in the price of cigarettes is probably one of the most successful, proven way of reducing smoking prevalence in a country.”
He says that in rich countries a 10 percent tax hike can result in a 5 percent drop in consumption, and affects poorer and younger members of the community the most.
Indigenous smoking rates at an all-time low despite drop in funding
Indigenous smoking rates are currently at an all-time low at 38.9 percent, dropping below 40 percent for the first time in history, according to figures released last week in the National Aboriginal and Torres Strait Islander Social Survey 2014-15.
This is despite a substantial cut to the Tacking Indigenous Smoking program in the 2014 budget of $130million over five years- one-third of the program's annual funding.
Whilst the federal government has launched a new series of ads this month to cut smoking rates in Aboriginal communities called "Don't Make Smokes Your Story", Dr Calma says if we want to see continued improvement both side of politics needs to step up.
“We would see even better results if we had consistent funding and we have a bipartisan approach to this,” he says.