FINANCIAL REVIEW: The booming illicit tobacco market has wiped $6 billion from the federal budget bottom line in just five months and revenue from tobacco excise is now forecast to plummet to just over $2 billion a year by 2030.
The government raked in more than $16 billion from tobacco taxes in 2020, but the continued raising of the excise sparked a violent black market trade run by criminal gangs that has decimated the legitimate market and resulted in a massive fall in revenue.
The government is now spending hundreds of millions of dollars on dealing with the fallout, including $14 million in the budget to boost the ability of states to disrupt the illicit tobacco and e-cigarette markets.
In the mid-year budget update, the government expected to raise $5.5 billion in tobacco excise in 2025-26. Five months later, that figure is now $4.1 billion, or 24 per cent lower than expected, and will fall to $2.1 billion by June 2030.
Legal cigarettes cost about $50, of which $34 is tax and excise, while the readily available illicit product is priced at about $15.
NSW Premier Chris Minns in 2025 called on Chalmers to consider lowering the excise, saying it was contributing to the illegal tobacco industry, while economist Chris Richardson has labelled the continued raising of the excise one of the worst policies this century.
“We’ve cratered the tax take, stalled the fall in smoking rates, and invited organised crime into the everyday lives of more than a million Australians,” Richardson wrote in The Australian Financial Review in April.
The budget expert said the failure by successive governments to do anything about the issue meant it would now be much harder to fix.
“Organised crime will fight tooth and nail,” he said. “They’ve been a huge success at that already: after all, they fought the law, and the law lost. Given we’re now handing them a tasty $5 billion a year in risk-free revenue, they’ll be cashed up and cranky if serious efforts are made to reverse course.” » | Ronald Mizen | Political correspondent | Wednesday, May 13, 2026
And so it will be here in the UK with Starmer's stupid, undemocratic, illiberal, and ridiculous generational smoking ban! Mark my words! That law will have to be REVERSED, REPEALED! Free up the people! You will enchain them at society's PERIL. — © Mark Alexander