Both parties to include a cigarette tax hike in May budget

The Turnbull government will likely increase tobacco tax to raise revenue in a budget backflip from when it rejected Labor’s same proposal last November.

Treasurer Scott Morrison told Fairfax yesterday that "of course" there will be revenue measures in the budget" next month, despite having said Australia has a spending problem rather than a revenue problem.

Industry Minister Christopher Pyne hinted at his government’s plan to raise the cost of cigarettes this week to Nine Network by saying high tobacco prices reduces national spending on healthcare.

“It makes a direct impact on the cost of health to the rest of the community,” Pyne said.

Reporter Tony Jones grilled Shadow Treasurer Chris Bowen on the ABC’s Lateline last night on whether higher tobacco tax would reduce the number of people who smoke while still increasing government revenue.

“How can you guarantee that this is going to be a growth tax that raises so much money over 10 years?” Jones asked Bowen.

Bowen replied by saying the Parliamentary Budget Office has “done the work and their costing”, and criticised the Turnbull government for its budget backflip.

“The government, after having complained about our policy, has pretty clearly indicated they’ll be in the same space on election day,” he said.

The federal budget will be announced on May 3.

How much can I save by giving up the smokes?

Based on Sky News’ prediction that a packet of darts will lift to a whopping $40, if you went through two packets per week but swapped smokes for stashing the same amount of money you would have spent into the bank for a whole year, you’d save a neat $4,174.

By using a high interest savings account as opposed to a regular bank account like the ING Savings Maximiser with a special interest rate of 3.5% (if you have an Orange Everyday and deposit $1,000 into it each month), your grand total would be $73 more at $4,247.

To do some calculations of your own, punch your hypothetical savings goal into this Mozo calculator.