Global illicit tobacco trade and excise tax debates

The illicit tobacco trade has become a significant policy and security concern in Australia and South Africa, driven by high excise duties that create price gaps exploited by criminal syndicates.

In Australia, debates have emerged regarding whether to reduce tobacco taxes to combat an organized crime-driven black market. Proposals include slashing taxes per packet or temporarily removing excise duties entirely to eliminate illegal sales. Some experts have characterized the current situation as a “wicked public health challenge.”

As the issue evolves, intelligence indicates that criminal operations have become more sophisticated. In Australia, factories in Southeast Asia, particularly Cambodia, are reportedly producing industrial-scale counterfeit cigarettes using packaging that mimics common brands and includes Australian health warnings. This has led to calls for stronger legislative powers for law enforcement to disrupt these supply chains. Similarly, in South Africa, industry stakeholders are pushing for more predictable multi-year tax frameworks to mitigate the growth of illicit markets caused by inflation-linked excise increases.