Why Cutting Tobacco Taxes Could Redefine Australia’s Fight Against the Illegal Nicotine Market

The Liberal‑National coalition, together with One Nation, has announced a proposal to cut the excise tax on cigarettes by 75‑80 percent. At the same time they want to legalise and tax vaping devices and nicotine pouches, hoping that legal products will be cheap enough to compete with the black market.

Today more than half of all cigarettes sold in Australia are bought illegally, and the share of the illicit nicotine market jumps to about 80 percent when vapes and pouches are counted.

A legal pack of 20 cigarettes now costs between $40 and $50, of which roughly $30 is excise tax. An illegal pack can be bought for $10‑$20. Cutting the excise by 80 percent would lower the price of a legal pack by $23‑$24, bringing it close to the price of illegal cigarettes.

Among 14‑ to 17‑year‑olds, smoking rates are extremely low and most teenagers describe smokers as “losers”. Nevertheless a recent poll showed that 26 percent of 12‑ to 17‑year‑olds have tried some form of nicotine and 15 percent say they might try it.

The government argues that cheaper legal cigarettes, combined with stronger enforcement, will cut organised‑crime profits that currently fund the black market. However, the same policy will also reduce excise revenue, and the federal budget is expected to be billions of dollars poorer over the next four years because of the loss of tax income.

Health Minister Mark Butler has criticised the plan, saying the Coalition has “no understanding” of how such a tax cut would affect Australia’s smoking and vaping rates.

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