Australia’s Coalition cites illicit tobacco growth as a key reason for recommending tobacco tax cuts, with estimates putting the illicit market at up to 80%. Photo credit ABF
Australia’s Coalition has called for tobacco excise to be cut by at least 80%, making the proposal the centerpiece of a wider package aimed at the country’s illicit tobacco market.
The recommendation appears in The Illicit Tobacco Crisis in Australia, a report by the Coalition’s Illegal Tobacco Taskforce, co-chaired by Liberal MP Mary Aldred and senator Richard Colbeck. The task force released the report on August 26 and made 12 recommendations covering tobacco taxation, enforcement, and the regulation of vaping products.
The task force said the current tax structure has contributed to a widening price difference between legal and illicit tobacco and reported that organized crime had taken “almost complete control of Australia’s tobacco market.”
The proposal follows a sharp decline in government tobacco excise revenue. Collections stood at approximately A$16 billion [US$11.1 billion] in 2019–20 but are expected to fall to about A$4 billion [US$2.8 billion] in 2025–26.
The task force cited the growth of the illicit market as a key factor behind its recommendation. Recent estimates cited in the political debate put the illicit sector at up to 80% of Australia’s tobacco market. The Australian Criminal Intelligence Commission and Australian Institute of Criminology have estimated that illicit tobacco cost Australia A$4 billion [US$2.8 billion] in 2023–24, according to the task force.
Aldred and Colbeck said Australia was “in the grip of an illicit tobacco crisis.”
“The problem of illicit tobacco has moved well beyond a revenue leakage issue and is now being described by Commonwealth agencies as a public health, community safety and organized crime problem,” the co-chairs said.
The report also recommends changes to the regulation of vaping products. The Coalition has called for a regulated framework that would allow businesses to legally sell vapes, alongside licensing requirements and other controls.
The Coalition proposal exceeds a separate plan announced earlier in August by One Nation, which called for a 75% reduction in tobacco excise and a three-year freeze on indexation. One Nation said its proposal would reduce the price of a pack of legal cigarettes by nearly A$30 (US$20.8).
The proposal drew criticism from health groups. Laura Hunter, Australian Council on Smoking and Health c.e.o., questioned whether an excise cut would reduce the illicit market.
“There’s no modelling” showing that such a reduction would achieve that outcome, Hunter said, according to Yahoo News Australia. “The cost of manufacturing these illicit products are only 28 cents a pack, and you cannot possibly price match that.”
Rohan Pike, founder of the Australian Border Force’s tobacco strike team, supported a major excise reduction. “We have to do it quickly and we have to go big,” he said. “We've got over 80% of the market in the hands of criminals. It could be 100 within the year.”
Labor senators involved in a parliamentary inquiry into illicit tobacco have rejected the Coalition’s recommendation for an immediate excise cut but said they could consider a freeze or adjustment if credible evidence showed that a change in excise, combined with enforcement measures, could affect the illicit market.