Smoke ‘Em If You Can Afford ‘Em: Aussie Cigarette Tax Is Through the Roof, Say Economists
Forget your local servo smoko run — if you’re coughing up $40 for a packet of darts, odds are you’re paying $28 of that straight to the taxman. And according to economists, that massive excise hike hasn’t stubbed out smoking — it’s just lit up the black market.
Over the last decade, the government’s tobacco excise has tripled from 46c to $1.40 per cigarette. That’s right — per ciggy. The average 20-pack is now more expensive than a slab of craft beer and nearly four times costlier than 30 years ago. But the smoking gun here? The tax is no longer deterring smokers — it’s fuelling crime.
Excise Impact by the Numbers
| Metric | Value/Trend |
|---|---|
| Excise per cigarette (2014) | $0.46 |
| Excise per cigarette (2024) | $1.40 |
| Average retail price per pack (2025) | $40 |
| Excise share of pack price | $28 (~70%) |
| Legal smoking rate (2005 → 2022) | 21% → 10.8% |
| Federal tobacco excise revenue (2019-20) | $16.3 billion |
| Forecast excise revenue (2024-25) | $7.4 billion (lowest since 2012-13) |
| Illegal cigarette seizures (2019–2023) | 605.8 million → 2.2 billion (265% jump) |
Sources: ATO, ANU Tax Policy Institute, ABS
What the Experts Are Puffing On
Bob Breunig (ANU Tax Policy Institute):
“We’re not reducing smoking anymore. The tax isn’t working. Freezing it is a start, but we need to hammer illegal tobacco.”
→ Translation: We’ve hit peak tax. No more gains. Time to plug the black market leaks.
Richard Holden (UNSW Economics):
“We went too hard on excise. It’s backfired. The illicit market’s booming. We need a bold rollback.”
→ Translation: Time to yank the handbrake before more servo smokes get firebombed.
Fei Gao (Uni of Sydney, Business Law):
“It’s either tax for health or tax for cash — pick one. You can’t have both if there’s a black market.”
→ Translation: You can’t milk a cow and stop it from chewing grass at the same time.
Crime Up in Smoke
From firebombed tobacconists in Victoria to rising links with organised crime, the underground ciggy game has gone full-blown gangster. NSW Premier Chris Minns and the Victorian Labor government have called for tax cuts to curb the chaos. But not everyone’s lighting that idea up.
Public Health Says: Don’t Be Conned, Mate
Terry Slevin from the Public Health Association reckons we’re being sweet-talked by Big Tobacco:
“Don’t fall for it. Keep the tax where it is and give law enforcement a chance to catch up. Once that’s done, reassess.”
He wants to see enforcement first, policy tweaks second.
Government’s Position: No Cut, Just Crackdown
Treasurer Jim Chalmers and Health Minister Mark Butler say slashing tax won’t stop black market sales. Instead, they’re gunning for stronger compliance — think border seizures, busting smuggling rings, and monitoring supply chains.
But the pressure’s mounting as federal revenue crumbles, black market numbers soar, and the public grows restless over ciggy prices that make petrol look like pocket change.
What’s Next?
The big pow-wow: Federal and state health ministers meet Friday to hash out next steps. Will Canberra cave and cool off the excise hikes? Or will it double down and try to extinguish the smuggling wave with enforcement alone?
Final Puff
Australia’s tobacco tax crusade was once hailed as world-leading. But now, the excise might be coughing up more crime than control. Whether it’s time to freeze, cut, or crack down harder, one thing’s clear: the policy’s hit a fiery fork in the road — and voters, economists, and ministers all want to know what’s next.
