Shadow treasurer Chris Bowen says Labor is keenly aware that its policy to push the price of cigarettes to $40 a packet by 2020 will hurt the poor.

The Labor Party announced earlier that, if elected, it would gradually increase tax on cigarettes, continuing beyond 2017.

"Poor people do smoke more, poor people die earlier," Mr Bowen said.

"That is unacceptable to us in the Labor Party, peoples' wealth is leading to lower life expectancy right across the country.

"There is a number of reasons why that is the case, but smoking is up there as a cause for people who are on low incomes dying earlier than people on high incomes.

"That is offensive to us as the Labor Party. This is a measure which will make a contribution to doing something about that."

The Opposition said the policy would generate savings of almost $50 billion over the medium term and almost double the rate at which people quit smoking.

"Money that we want to put towards budget consolidation but also towards very important health initiatives," Labor's health spokeswoman, Catherine King, said.

A packet of 25 cigarettes now costs between $25 and $30.

British American Tobacco Australia said Labor's proposed cigarette tax increase would drive the trade in illegal tobacco.

Company spokesman Scott McIntyre said the change would only push smokers into the black market, which accounted for 14 per cent of all tobacco consumed in Australia.

"If the goal is to quit ... you are not actually making people quit, you are just essentially having people smoking the same, but paying less for it," Mr McIntyre said.

Increase reflects WHO advice: health spokeswoman

Ms King said the increase to $40 would correspond with advice from the World Health Organisation.

"We have some 2.5 million Australians who continue to smoke and we lose about 15,000 people a year from smoking-related diseases," she said.

"The World Health Organisation will tell us, as our own national tobacco strategy does, that you do need to continue to ramp up the excise on cigarettes if you are going to continue to drive smoking rates down."

Ms King said the increase would bring Australia into line with the excise rates of about 33 other countries.

She also acknowledged heavy smokers were some of the poorest people in society and promised more policies to help prevent and deal with smoking addiction.

"We want people to stop, we want more people to give up, we want more people who are in difficult circumstances to give up as well because we know that smoking kills people," she said.

"We'll be making some further announcements about what we might do to assist people, particularly those areas of the population who find it very difficult to give up smoking."

Opposition Leader Bill Shorten said the policy showed the "stark" difference between Labor and the Government.

"Labor wants to reduce the number of people who smoke; Malcolm Turnbull's Liberals want to increase the GST and the cost of everything, including fresh food, school fees and going to the doctor," he said.

The Government has repeatedly said it has no plans to increase the GST, but is conducting an inquiry into the tax system, saying all suggestions will be considered.