Australia's illegal tobacco market has cost the federal government $3.3bn in lost tax revenue, according to a report by the Australian Criminal Intelligence Commission (ACIC). The overall economic impact, including healthcare costs and productivity losses, totalled $4bn in 2023-24.
The ACIC warned that organised crime's dominance of the illicit tobacco trade is growing, with the Australian Taxation Office estimating that one in five tobacco sales are now illegal. The excise on legal cigarettes reached almost $30 for a pack of 20 in September, an eightfold increase since 2006, when it was $4.65.
The excise hikes, aimed at reducing smoking rates, have drawn criticism from New South Wales Premier Chris Minns, who called for a federal review. He noted that a legal pack costs $50, while an illegal pack can be bought for $13, effectively subsidising a cheap, untaxed tobacco industry.
The ACIC report also highlighted escalating violence, or 'tobacco wars', with at least three deaths and over 200 firebombings linked to the illicit market since 2023. The Australian Institute of Criminology said the $4bn estimate was 'almost certainly an underestimate', as it excluded e-cigarettes and illegal vapes.
Federal Treasurer Jim Chalmers has rebuffed calls for a review, stating he does not believe the answer is to make cigarettes cheaper. Treasury forecasts show tobacco excise revenue is expected to fall from $16.3bn in 2011-12 to $7.1bn next financial year, a drop of $6.9bn over four years.
