THE cost of a packet of cigarettes could rise to $40 after the Federal Government confirmed a hike in the tobacco excise as part of the 2016 Budget to be released tonight.
Finance Minister Mathias Cormann confirmed the Budget would contain a 12.5 per cent annual increase in tobacco excise to 2020.
The measure is a copy of a Labor policy. But leaked Treasury modelling shows a $19.5 billion funding hole in Labor’s revenue estimates for the measure.
Labor wants to use revenue from the excise hike to pay for its schools funding plan over 10 years.
“We are implementing in the Budget the same policy on tobacco excise as Labor has previously announced and what is very clear is that Labor’s sums just don’t add up,” Mr Cormann said.
He said the government’s assumptions for calculating the tax from cigarettes would be released as part of the Budget tonight.
Opposition finance spokesman Tony Burke dismissed the modelling, saying even if it was accurate Labor was planning to make more savings than it was planning to spend.
“The claim that anything is unfunded is purely fictitious,” he told ABC radio.
“Labor has never released what their assumptions or constructions were.”
Shadow treasurer Chris Bowen says the Parliamentary Budget Office would update Labor’s policy costings after the Budget and again after the pre-election fiscal statement.
He also denied the revenue from tobacco taxes would go directly to schools, saying it was just one of Labor’s planned savings.
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