Federal Budget 2023: Hipster tax on roll-your-own cigarettes now targeted

A loophole for loose-leaf tobacco will be closed with roll-your-own smokes to be taxed the same as ready-made cigarettes.

Hipsters are getting a hip-pocket hit with roll-your-own smokes to be taxed at the same rate as ready-made cigarettes.

The loophole for loose-leaf tobacco, which is sold in pouches, will be closed, Budget papers revealed.

The move was part of a $3bn hit on smokers, with taxes to increase 15 per cent over three years.

“The government is encouraging smokers to quit by raising tax on tobacco by 5 per cent per year for three years from September 1, 2023, and ensuring loose-leaf tobacco is taxed equally to cigarettes,” budget paper No. 1 states.

Roll-your-own smokes will be taxed at the same rate as ready-made cigarettes.

The move will push the cost of a packet of cigarettes well above $50.

As predicted, there is also a crackdown on e-cigarettes and vaping, which has become an increasing problem in schools.

“The government is also proposing stronger regulation and enforcement of e-cigarettes, including new controls on their importation, contents and packaging,” budget paper No. 1 states.

The new tax increase on cigarettes and “rollies” was expected to increase activity in black market, or “chop chop”, tobacco often sold illegally at markets.

Treasurer Jim Chalmers sold the smoking crackdown as a “meaningful” tax grab in his budget speech.

Beer taxes are down.

Smokers blew almost $13bn on taxes, up $300m on estimates, according to the budget papers.

The budget includes $141m to tackle Indigenous smoking and $29m on programs to encourage people to quit.

But while smoking taxes are increasing, the federal government is gouging less from beer drinkers. Tax receipts on beer droppedby $30m to $2.5bn, partly driven by the popularity of mid-strength beer which gets taxed at a lower rate.

Health-conscious young people have also been avoiding beer, with sales of hard seltzers – spirits with soda water – rising.

Whiskey, vodka and gin sales were increasing, with the tax take from spirits up $60m to $3.5bn.

“Other alcoholic beverages”, with an alcohol content of less than 10 per cent, were also up $60m to $1.68bn, but the “wine equalisation tax” take was down $50m.

Originally published as Federal Budget 2023: Hipster tax on roll-your-own cigarettes now targeted