Govt Expected to Avoid Increasing Cigarette Taxes in Budget to Curb Smuggling

The federal government is unlikely to increase the Federal Excise Duty (Federal Excise Duty) on cigarettes and tobacco products in the upcoming budget, despite earlier considerations to boost revenue through higher taxation in the sector.

According to Topline Securities, the government recently reviewed options including raising excise rates and simplifying the current two-tier tax structure.

However, the existing framework will likely be maintained.

Any significant increase in tobacco taxes could negatively impact the formal cigarette industry by encouraging a shift toward cheaper illicit products, which reduces overall tax compliance instead of improving revenues.

As a result, no major adjustment in tobacco-related excise duties is expected in the upcoming fiscal plan.