Australia tobacco tax debate intensifies over illicit market growth

The Australian Coalition has proposed a significant reduction in the tobacco excise to combat a booming illicit market. Opposition Leader Angus Taylor suggested slashing the federal excise to bring the retail price of a standard 20-pack of cigarettes down to under $15, aiming for parity with black market prices. The plan also includes legalising vapes for adults and allocating $200 million to law enforcement to target smugglers.

Estimates from the Australian Bureau of Statistics indicate that approximately 80 per cent of all tobacco consumed in 2025 was illegal, a sharp increase from 12 per cent in 2017. Critics and the Coalition argue that high taxes are effectively “funding organised crime,” with illicit markets generating an estimated $4.1 billion to $6.9 billion in profits used to fund drugs, scams, and violence.

In Parliament, Prime Minister Anthony Albanese and Treasurer Jim Chalmers declined to rule out a reduction in the tobacco excise when questioned. Meanwhile, some experts, including former detective Charlie Bezzina, expressed skepticism that tax cuts alone would curb the black market, suggesting that consumer demand for cheaper illegal products may persist regardless of minor price adjustments.