The black market for nicotine products in Australia has reached 80%, with illegal purchases accounting for more than half of all tobacco consumed last year. This surge, reported by ABC News Australia, marks a rise from a decade ago when illicit sales stood at just 10%.
A legal pack of 20 cigarettes in Australia costs between A$40 and A$50, driven by heavy taxation. In contrast, illicit syndicates sell smuggled equivalents for A$15 to A$20. This price gap has fueled organized crime and caused multi-billion-dollar losses to the federal budget.
| Pricing Scenario | Retail Price (A$) | Excise Tax Component (A$) |
|---|---|---|
| Current Legal Pack | A\$42.60 | A\$30.50 |
| Black Market Pack | A$15.00 – A$20.00 | A\$0.00 |
| One Nation Proposal (75% Cut) | A\$21.20 | A\$7.63 |
| Coalition Working Group Proposal (80% Cut) | A\$18.15 | A\$6.10 |
Political Parties Propose Excise Tax Cuts
To combat the black market, the Coalition and the One Nation party are advocating for tax relief. The current excise duty on a A$42.60 pack is A$30.50. One Nation has proposed a 75% tax cut, which would lower the retail price to A\$21.20.
A parliamentary inquiry report recommended freezing the excise tax until the black market is cleared. Additionally, an internal Coalition working group discussed an 80% tax reduction, potentially dropping pack prices to A\$18.15 to compete directly with illicit sellers.
Government Defends High Taxes Amid Revenue Drop
The Labor government rejects lowering the tax. Health Minister Mark Butler argued that abolishing the tax would not eliminate the black market, as legal products would still struggle to match illicit prices. "Even a complete abolition of the excise tax would not guarantee the elimination of the black market," Butler stated.
Public health advocates, including University of Sydney professor Becky Freeman, argue high taxes remain vital for reducing smoking rates. Daily smoking in Australia fell from one in seven in 2010 to 5.6% in 2025. However, legal tax revenues plummeted from A$16.3 billion in 2019–2020 to an estimated A$4.1 billion for 2025–2026, indicating consumers are shifting to illicit channels rather than quitting entirely.
Criminologist James Martin countered that a temporary suspension or reduction of the excise tax is necessary to strip organized crime of its profit margins.

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