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April 29, 2010, 12:52 a.m. EDT

Australia sharply raises tobacco taxes, ends advertising

Will become first nation to require all cigarettes to be sold in plain packets

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By Michael Kitchen, MarketWatch

LOS ANGELES (MarketWatch) -- Australia on Thursday increased the excise duty on tobacco products by 25% and said all cigarettes will have to be sold in generic packages without logos.

The ban on branded cigarette packages, which will go into effect in 2012, was described by the office of Prime Minister Kevin Rudd as a "cracking down on one of the last frontiers for tobacco advertising."

The law would restrict or prohibit any logos or brand imagery, and require cigarettes to be sold with all promotional text, other than the brand and product name, to be in a standard color, position, font and size.

The measure will also update and expand graphic health warnings against smoking.

The increase in the excise duty goes into effect at midnight Thursday, the same day of the announcement, and "will provide an extra 5 billion [Australian dollars ($4.6 billion)] over four years, which along with existing revenues from tobacco, will be directly invested in better health and hospitals through the National Health and Hospitals Network Fund," a statement from the PM's office said.

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The initiative also includes restrictions on tobacco advertising over the Internet and an extra 27.8 million Australian dollars to be spent on anti-smoking campaigns.

"Smoking kills over 15,000 Australians every year, and ... the social costs of smoking (including health costs) are estimated at 31.5 billion [Australian dollars] each year," the statement said.

According to a Cancer Council Victoria report titled "Tobacco in Australia," the Australian unit of British American Tobacco PLC /zigman2/quotes/209116881/delayed UK:BATS +0.69% /zigman2/quotes/200689147/composite BTAFF -0.83% holds the top market-share rank for the nation, with its Winfield, Benson & Hedges, Dunhill and other brands representing 42% of grocery sales and 56% of convenience-store sales in 2007.

In second place is Philip Morris International Inc. /zigman2/quotes/201611010/composite PM -0.07% , whose Longbeach and Peter Jackson brands helped it garner a 40% share at groceries, in addition to 33% at convenience stores in 2007.

Imperial Tobacco Group PLC was third that year, with Horizon and Peter Stuyvesant as its most popular brands in Australia. See full study.

UK : U.K.: London
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$109.70 billion
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Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.

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