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, as a share of income, 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 | 605.8 million (2019-20) to 2.2 billion (2023-24) |
What the Experts Are Puffing On
Bob Breunig (ANU Tax Policy Institute):
“The point is to get people to smoke less, and it’s not working. I don’t think we should lower it, but freezing it is a good idea, and then doing something that deals with illegal tobacco is the next obvious step.”
→ Translation: We’ve hit peak tax. No more gains. Time to plug the black market leaks.
Richard Holden (UNSW Economics):
“We went pretty hard on increasing the excise rate and it backfired. They raised it too high.” and “Clearly the excise has gotten over a threshold and triggered an illicit market reaction.”
→ Translation: Time to yank the handbrake before more servo smokes get firebombed.
Fei Gao (Uni of Sydney, Business Law):
“The government needs to realise they can’t have it both ways.” and “Either the tax is mainly a revenue source, which means they need to engage experts to work out the ideal [lower] rate that will capture the maximum revenue, or they need to keep a high excise rate and then reinvest the receipts into fighting the 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:
“I think it’s perfectly legitimate for the current excise rate to remain at its current level to allow time for the proper enforcement to be put [in] place.”
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.
Sources:
- The Guardian Australia, “Tobacco excise has passed a ‘tipping point’ and is fuelling black market, economists warn”
- ABC News, “NSW premier calls for lower tobacco excise as black market cigarette sales boom”
- ATO, tobacco excise and seizure figures
- ABS, “Smoking and vaping” (National Health Survey 2022, released 15 December 2023)
Photo: Park taeho, cropped, CC BY-SA 4.0, via Wikimedia Commons.
Illustrative: a standing ashtray filled with cigarette butts.
