Coalition Backs 80% Tobacco Excise Cut, Reducing Cigarette Prices by Around $30
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Australia's Coalition, under the leadership of Angus Taylor, has announced an ambitious proposal to reduce tobacco excise by 80 percent. This substantial tax cut would lower cigarette prices by approximately $30 per packet, bringing them to levels not seen since 2013. The measure represents a significant shift in tobacco pricing policy within the country.
The Coalition frames the cut as a strategy to combat the growing illicit tobacco trade by making legal cigarettes more price-competitive. However, the timing closely follows One Nation's proposal for a 75 percent excise reduction, leading critics to suggest the policy is equally motivated by political positioning against Pauline Hanson's party. Angus Taylor has pushed back against suggestions the Coalition adopted the policy from One Nation, instead emphasising the economic rationale for undercutting illegal market alternatives.
- Coalition proposes 80% tobacco excise cut, reducing cigarette prices by ~$30 per pack to 2013 levels
- Policy framed as combating illicit tobacco trade through competitive legal pricing
- Announcement follows One Nation's similar 75% cut proposal, sparking debate over political versus policy motivations
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Australia currently taxes cigarettes heavily through what is known as tobacco excise, a tax built into the price of every packet sold. Over recent years, repeated increases in this tax have pushed legal cigarette prices up sharply, and this is widely blamed for fuelling a large black market in illegal, untaxed tobacco. The Coalition, one of Australia's main opposition parties, is now proposing to cut this excise by 80 percent, which would bring prices down by roughly $30 a packet.
The proposal is being put forward by Angus Taylor, who leads the Coalition. Also relevant is Pauline Hanson's One Nation party, a minor party that recently floated its own smaller excise cut of 75 percent, prompting questions about whether the Coalition's larger proposal is a response to that move.
The issue matters because it touches on public health policy, government tax revenue, and the size of Australia's illegal tobacco trade, all of which have been long-running concerns for policymakers. It also has a political dimension, as different parties compete over how best to address rising cigarette prices and the growth of illicit sales.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that punishingly high excise has failed on its own terms: rather than driving people to quit, it has fuelled a booming illicit tobacco market run by organised crime, undercutting legitimate retailers and depriving the state of revenue anyway. On this view, a steep cut restores the price competitiveness of the legal market, protects small businesses and consumers from unregulated, potentially more dangerous black-market products, and is a pragmatic response to a policy that has visibly stopped working as intended. Proponents also see it as respecting consumer choice and cost-of-living pressures, rather than relying on taxation as the primary lever for public health outcomes.
The case against
Opponents contend that tobacco excise remains one of the most effective public health tools for reducing smoking rates, particularly among young people and low-income smokers who are most price-sensitive, and that a roughly $30 cut risks reversing decades of progress in lowering smoking-related illness and death. They argue the illicit trade problem should be tackled through better enforcement and border security rather than by slashing the price signal that discourages uptake and encourages quitting, and worry that the policy's rapid emergence alongside a rival party's similar proposal suggests short-term political positioning is taking precedence over long-term health outcomes and the eventual cost to the healthcare system.
Full account
Australia’s Coalition has proposed cutting tobacco excise by 80 per cent, a move it says would make legal cigarettes competitive with illicit products and reduce the price of a typical pack by about $30. Under the plan, the excise on a packet of 20 cigarettes would fall from roughly $30 to a little over $6. The policy follows One Nation leader Pauline Hanson’s August proposal for a 75 per cent reduction.
Opposition leader Angus Taylor argues that high legal prices have helped create a flourishing illicit market, reducing tax receipts while contributing to organised crime and attacks on tobacco retailers. The Coalition says legal packs currently cost about $40 to $60, compared with around $15 to $20 for illegal products. It points to estimates that illicit products make up most tobacco consumption, although the reports describe these figures in different ways.
The proposal would also legalise, regulate and tax vapes and nicotine pouches for adults. It includes $200 million for law-enforcement efforts against illegal tobacco and $60 million for a public-information campaign linking the trade to organised crime. The Coalition says the policy would be reviewed after two years, while Parliamentary Budget Office estimates cited in one report suggest it could improve the budget position despite the lower nominal tax rate by shifting sales back into the legal market.
Labor has rejected the proposal, with minister Tanya Plibersek arguing that cheaper cigarettes would damage public health and reverse gains from Australia’s high tobacco prices. Greens senator David Shoebridge also raised health and addiction concerns. The Coalition maintains that the existing approach has produced rising crime, illicit supply and lower revenue, while its critics say reducing cigarette prices risks increasing smoking even if it weakens the black market.
Where outlets differ
Source 1 places greater emphasis on the policy’s political timing after One Nation’s 75 per cent proposal, and on the argument that lower excise could increase revenue by recovering sales from the illegal market.
Source 1 also foregrounds support from an economist, a former deputy chief medical officer and a former law-enforcement investigator, including their warnings about criminal violence and lost government control.
Source 2 focuses more on Angus Taylor’s political position, the Coalition inquiry’s call for action, and a recent firebombing, while giving more prominence to Labor’s public-health objection.
The reports use different measures for illicit consumption: Source 1 says more than half of tobacco consumed last year was illegal and puts the broader illicit nicotine market at 80 per cent; Source 2 attributes an estimate of 80 per cent of tobacco consumption in 2025 to the Australian Bureau of Statistics.
Coverage
- Daily Mail — Coalition proposes 80 per cent cut to tobacco excise
- Daily Mail — Cigarette prices to drop $30 under radical Coalition plan – as Angus Taylor denies lifting policy from One Nation