Amidst a booming illegal tobacco industry, is the tobacco excise stopping anyone?
Australia’s illegal tobacco market is flourishing, even in the face of raids, gang warfare and the whole shop being burnt down, cheap durries persist.
In the past 10 years, the tobacco excise has increased dramatically. A pack of 20 cigarettes once cost $8, now reaches $30, even $40 thanks to the government’s excessive tax. Fun fact: Australia boasts the world’s most expensive pack of darts.
The tobacco excise (which is a fancy word for inland tax) now accounts for three quarters of the total price. It’s a pretty sweet income stream for the government, which peaked in 2022 and raked in $16.3 billion.
But now, these numbers are starting to wane.Generating just $7.8 billion in tax last year and forecasted to hover around $4.5 billion for the next few years, the excise is in question.
When tobacco taxes first started climbing, many asked if this would create a very well-sized hole in the market for black market trade. Now, the illegal tobacco trade is worth over $10 billion and continues to dominate our convenience stores.
In the face of a $20 billion in tax revenue loss, treasurer of Australia Jim Chalmers maintains lowering this cost will not solve the problem.
Meanwhile, finance minister Katy Gallagher stated last week that officials were consulting departments to potentially re-assess the tax. A freeze is being considered.
Deputy secretary Diane Brown was also incredibly vague about the next steps, stating they were re-modelling tobacco demand with the black market trade in mind, but no commitment to policy change.
Some would argue the cat’s already out of the bag; Vapes were outlawed in July 2024, but remain available (secretly, of course) at stores across the country.
In a recent bid to curb this, laws in NSW now allow police to shut down outlets and suspend their business for 90 days. In the last 6 months, 52 stores have already been shut down.
Has the luxury of $10 black market packs finally come to an end? Until the government can find a new method to agree on, aside from scary packaging and pocketing billions from legal tobacco, the question remains.
