Coalition proposes 80 per cent cut to tobacco excise
Australia's Coalition, led by Angus Taylor, has unveiled a plan to cut tobacco excise by 80 per cent, closely following One Nation's earlier proposal to slash it by 75 per cent, prompting accusations that the move is aimed at outflanking Pauline Hanson's party as much as tackling the illicit tobacco trade. The policy responds to a booming black market, with more than half of tobacco consumed in Australia last year bought illegally and, once vapes and nicotine pouches are included, illicit products accounting for 80 per cent of nicotine consumption. Health Minister Tanya Plibersek has dismissed the plan, claiming it would cost lives, a response the article's author brands out of touch given the criminal violence already linked to the tobacco black market.
Under the Coalition's proposal, the excise on a packet of 20 cigarettes would fall from about $30 to just over $6, while vapes and nicotine pouches would be legalised, regulated and taxed for adults. The package also includes $200 million for law enforcement and $60 million for a public awareness campaign on ties between illegal tobacco and organised crime, with a review after two years. The Parliamentary Budget Office estimates the cut would raise an extra $8 billion over four years and improve the budget position by more than $20 billion over a decade, and the plan has been backed in a joint letter to the Prime Minister from economist Richard Holden, former deputy chief medical officer Nick Coatsworth and ex-AFP investigator Rohan Pike, who argue excise rises under both major parties have fuelled the crisis. Labor has already rejected the proposal.
- Coalition proposes an 80% cut to tobacco excise to fight illicit trade
- Move follows One Nation's 75% cut plan, seen as one-upmanship
- Plibersek opposes it; experts and PBO data back the cut
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Australia currently taxes tobacco heavily through an excise, a per-cigarette tax that has pushed the price of a packet of 20 up to roughly $30. That high price has fuelled a large black market: more than half the tobacco smoked in the country last year was reportedly bought illegally, and organised crime groups have been linked to the trade. Vapes and nicotine pouches sit in a legal grey area, adding to the illicit market's size.
The Coalition, Australia's main opposition grouping, is led by Angus Taylor. Its proposed 80 per cent cut to the tobacco excise follows a similar, slightly smaller proposal from Pauline Hanson's One Nation party, putting pressure on the government to respond to a debate that cuts across the usual left-right lines on health policy versus law and order. The governing Labor party, whose health minister is Tanya Plibersek, has generally favoured high tobacco taxes as a public health tool to discourage smoking.
The issue matters because it pits two competing goals against each other: using tax to reduce smoking rates versus curbing a criminal black market that some argue the high tax itself has created. Independent voices, including economists and former law enforcement and health officials, have weighed in publicly, while budget analysts have modelled the financial impact, making this both a health and an economic policy question with implications for government revenue and public safety.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that when illicit tobacco already accounts for the majority of consumption, an extremely high excise no longer curbs smoking so much as it funds organised crime and violent black-market competition. They contend that sharply cutting the tax, while legalising and regulating vapes and nicotine pouches, would strip criminal networks of their profit margin, bring consumers back into a regulated market, and free up resources for enforcement and public education. Backed by an economist, a former deputy chief medical officer and an ex-AFP investigator, they see this as a pragmatic correction to a policy that, however well-intentioned, has visibly failed on its own terms.
The case against
Opponents argue that tobacco excise has been one of the most effective public health levers for reducing smoking rates, particularly among young and price-sensitive people, and that slashing it by 80 per cent risks reversing decades of gains in exchange for an uncertain reduction in black-market activity. They worry that cheaper legal cigarettes could increase uptake and relapse, that the illicit trade could persist regardless given the profits still available, and that a policy shift timed so closely to a rival party's proposal looks more like an attempt to outflank a political competitor than a carefully evidenced health intervention, with only a two-year window before review.
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Originally published by Daily Mail as “This is an absolute howler from Tanya Plibersek. We shouldn’t be surprised: Minister shrieks that plan to cut ciggie tax ‘will kill people’. Has she seen the news? PETER VAN ONSELEN”.