Coalition proposes 80% tobacco excise cut to fight illicit trade

The Australian Coalition has proposed a major policy shift to combat the illicit tobacco and nicotine black market by slashing tobacco excise by 80 per cent. Opposition Leader Angus Taylor stated the plan aims to make legal cigarettes more affordable than illegal ones, thereby removing the economic incentive for organized crime gangs. The proposal also includes legalizing, regulating, and taxing vapes and nicotine pouches for adults, alongside a $200 million law enforcement surge to increase raids and seizures.

The Australian Association of Convenience Stores (AACS) has endorsed the plan, citing the need to curb gang-related violence, including firebombings and extortion. Conversely, the Australian Medical Association (AMA) has condemned the proposal as “reckless,” arguing that lower cigarette prices will undermine public health efforts and increase smoking rates, particularly among vulnerable populations.

Economist Richard Holden has suggested that a temporary removal of the excise could help dismantle the illicit industry. Current estimates suggest that approximately 80 per cent of tobacco consumed in Australia is sourced through the illegal market, a significant increase from previous years.