Opposition Leader Angus Taylor has unveiled the Coalition’s plan to crush the illegal cigarette trade by making legal tobacco dramatically cheaper.
Mr Taylor announced the plan on Thursday, saying it would attack the booming black market and strip organised crime of its customers and profits.
The plan includes an 80 per cent cut to the tobacco excise, legalising the sale of vapes and nicotine pouches, as well as a $200 million investment in law enforcement.
Mr Taylor said the two-pronged approach would drive up the price of illegal cigarettes and reduce the cost of legal cigarettes, returning about $8bn in lost tax revenue.
“The current policy is protecting the business model of organised crime in this country,” Mr Taylor told reporters at a press conference in Melbourne.
“We need to smash the business models of organised crime in this country. That is what an 80 per cent cut to the excise combined with $200 million of law enforcement will do.
“It will bring that business model to an end by taking away the customers, taking away the profits, and then smashing what is left with… funding for law enforcement.”
Under the Coalition proposal, the excise on a standard packet of 20 cigarettes would fall from about $31 to $6—an 80 per cent reduction.
The Coalition believes this will reduce the cost of legal cigarettes from about $40-$60 per packet to about $18, in line with the current $15-20 cost of illegal packets.
“We’re going to raise the cost of the black market…We’ll take away the profits and the customers,” Mr Taylor said.
“And we’ll raise their costs, and we’ll do that through $200 million of joint law enforcement activities across federal and state governments.
“I am confident that that will make the illegal trade harder and more expensive, and that will ensure that what’s left, after we’ve cut the excise, is destroyed.”
Deputy opposition leader Jane Hume said the policy will help reduce crime, as more than 200 firebombings have occurred over three years, tied to the black market.
“Criminals and organised crime are running the tobacco market in Australia, and that is particularly so here in Victoria,” she said.
“In the last three years, there’s been more than 200 firebombings here in Victoria. The latest one was just this morning. It’s become the norm,” Ms Hume said.
A man was critically injured in a tobacco-shop firebombing in Victoria on Thursday, which was linked to violence surrounding the illicit market.
“The Coalition has a plan to deal with this. It’s pretty simple. Our approach is straightforward,” Ms Hume said.
“Disrupt the organised crime’s business model by lowering the excise, removing their profit margin, and then making sure that enforcement is well funded and coordinated.”
Australia’s illicit tobacco market has exploded over recent years, with criminal gangs estimated to control 80 per cent of the trade.
This has caused tobacco excise revenue to collapse from $16.3 billion in 2020 to a projected $4.1 billion this year.
Modelling by the Coalition shows the approach would be a boon to taxpayers, recouping $8 billion in revenue over the first four years.
Former Australian Border Force officer Rohan Pike welcomed the plan, saying Australia was “going downhill on every metric” with the current approach.
The announcement comes less than a month after One Nation committed to cutting excise by 75 per cent.
Meanwhile, Labor has defended the existing excise, saying reducing prices would lead to a “race to the bottom” with bikie gangs.
Labor’s Social Services Minister Tanya Plibersek told News24.com.au the Coalition’s plan to slash tobacco excise would “kill people” by encouraging Australians to smoke.
“If we drop the excise… that is a guarantee that we will see smoking and vaping rates in this country increase. That will lead to deaths,” she said.
“If we drop the price of legal cigarettes, what’s to say organised crime won’t drop the rate of illegal cigarettes.
“Are we really going to be in a race to the bottom with criminal organised gangs making these dangerous products overseas?”
In response, Liberal MP Mary Aldred, who co-authored the Coalition’s report, The Illicit Tobacco Crisis in Australia, said Ms Plibersek “had it exactly backwards”.
“Criminals rub their hands together every time the tax is increased. A $30-plus tax gap on every packet of cigarettes is acting as a massive subsidy for organised crime,” Ms Aldred told News24.com.au on Thursday.
“If sky high excise worked, we wouldn’t have a black market supplying 80 per cent of the tobacco consumed in this country, up from 12 per cent in 2017, on the ABS’s own numbers.”
Ms Aldred pointed to figures that there have been more than 200 firebombings since 2023 amid the surge in the black market, including at least one death.
“The Minister is defending a policy under which nicotine consumption has risen nearly 40 per cent since 2017, even as the legal market collapsed,” she said.
“The current absurd reality is that tobacco control and public health policy is being run by criminals.
“Illicit products face zero quality control, zero age checks, and zero regulation. Every packet the black market sells is one the government has no oversight of. Bringing consumers back into a controlled and regulated market is a critical objective of our policy.”
Read related topics:Tobacco Black MarketTobacco Excise Debate