Australia tobacco excise debate intensifies over illicit market

The Australian Association of Convenience Stores (AACS) is urging the Labor government to use the upcoming December half-yearly budget update (MYEFO) to reduce tobacco excise. The industry argues that high taxes on legal tobacco are driving consumers toward the illicit market, which is controlled by organized crime groups.

The federal Coalition has proposed a significant policy overhaul, including an 80% reduction in tobacco excise alongside the introduction of a regulated market for vaping products and nicotine pouches. This plan also includes $200 million in funding for enforcement against criminal networks. The AACS notes that reducing excise is the most effective way to undercut the black market and protect business owners from related violence, such as recent arson attacks.

Data from the Australian Bureau of Statistics suggests that illicit sources could account for approximately 80% of total nicotine consumption by 2025. While high taxes were intended to reduce smoking, the price gap between legal packs costing $40–$50 and illicit packs selling for $15–$20 has encouraged substitution rather than cessation.