However, one of the irony's of hiking tobacco taxes is that some experts argue they tend to be regressive, falling most heavily on lower-income households.

Parliamentary Budget Office estimates show the Commonwealth would raise $3.8 billion in 2017-18, even after taking into account the probable decline in smoking rates because of the higher cost, particularly by more price-sensitive younger smokers.

Cost to rise to $40.80

Under Labor's plan, a pack of 25 cigarettes would cost $40.80 in 2020, up from $24.69 today.

Under a policy announced by former prime minister Kevin Rudd in 2013 and retained by the Coalition government, tobacco excises go up each year by 12.5 per cent to 2016-17.

Labor will say the tax hike will bring Australia in line with World Health Organisation recommendations that the best way to curb tobacco use is to set the excise at more than 75 per cent of the retail price.

WHO estimates that Australia's tobacco taxes are equal to 57 per cent of the retail price, well below Britain, France and New Zealand and 33 other countries that levy at least 75 per cent.

The estimated $31.5 billion economic and social cost of tobacco is more than three times the annual revenue raised from tobacco excise, even though daily smoking rates have fallen from 19.1 per cent of the population in 2007-8 to 12.8 per cent.


Mr Shorten said that figure, which indicates 2.5 million Australians smoke every day, is still too high.

"It's a drain on our health system and a drag on our economy. We must be doing more to reduce these unacceptably high levels.

Four annual excise hikes

Under Labor's plan there will be four annual 12.5 per cent excise hikes on September 1 in each of the four years from 2017 to 2020.

Regular hikes in the cost have been welcomed in the past by groups such as the Cancer Council, which say repeated increases are more effective in cutting smoking rates than a one-off adjustment.

"Ask any parent who smokes whether they want their kids to start smoking as well and of course they'll say no," Mr Shorten said. "I want to stop young people taking up smoking and I want more people to quit smoking."