Australian smokers are being slugged even more for legal cigarettes after another tobacco tax increase came into effect this week, pushing the tax alone above $31 for a standard packet of 20.
The tobacco tax increases twice a year, with the latest rise taking effect on September 1. It pushes the starting retail price of a pack of cigarettes to about $40.
Smokers are now paying $1.55 in tobacco tax on every cigarette, meaning more than $31 of a 20-pack is tax before other costs are added. GST also applies to the final price.
The latest increase lifted the tobacco tax by 1.6 per cent and comes as authorities battle Australia’s booming illegal tobacco trade.
Sydney lawyer Avinash Singh told Yahoo News tobacco excise duty continues to rise in an attempt to deter Australians from smoking.
“Part of the reasoning behind increasing taxes on tobacco is to act as a deterrent to people purchasing tobacco due to the health risks associated with it,” he said.
Australia’s tobacco excise rates increase twice a year in March and September, driven by inflation indexation plus an additional scheduled five per cent annual hike.
“In addition to indexation, the tax treatment of per-kilogram tobacco products, such as roll-your-own tobacco, is being aligned with the per-stick rate for manufactured cigarettes,” Singh said.
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Australian smokers are paying even more for legal cigarettes after a fresh tobacco excise increase took effect on September 1.
(Getty)Tobacco buyers abandon supermarkets as black market booms
Australians are increasingly buying their tobacco from tobacconists rather than supermarkets, a dramatic shift that has coincided with the explosion of the illicit cigarette market.
In 2013, 51 per cent of tobacco buyers purchased from major supermarkets, while just 17 per cent used tobacconists.
By 2025, that had completely reversed. Almost half — 47 per cent — bought tobacco from tobacconists, compared with just 19 per cent who purchased from major supermarkets, according to Australian Institute of Health and Welfare data.
The figures come as illicit tobacco use surges nationally, with 34 per cent of current smokers reporting recently using illicit tobacco in 2025 — more than double the 16.7 per cent recorded in 2022–23.
When possessing illegal tobacco can land you in trouble
The consequences become severe when illicit tobacco is possessed for the purpose of sale or supply, and the penalties vary dramatically depending on where the offence occurs.
In Western Australia, an individual can face up to 10 years behind bars and a $600,000 fine for a first offence, while South Australia allows fines of up to $350,000 for an individual possessing illicit tobacco for the purpose of sale.
Singh said the stark differences between jurisdictions meant people accused of illicit tobacco offences could face vastly different consequences depending on where they were caught.
“Ordinary Australians would rightly be concerned that there is such a vast disparity between the penalties for this offending based on which state the offence occurs,” Singh said.
Singh said the disparity could also indicate that jurisdictions with significantly lower maximum penalties need to toughen their laws.
“It also may reflect that some States, such as Victoria and Queensland, need to drastically increase their maximum penalties for illegal tobacco offences,” he said.
Authorities are cracking down on illegal tobacco sellers as Australian smokers face another increase in the tax imposed on legal cigarettes.
(NSW Police)Coalition vows to slash cigarette tax by 80 per cent
The Coalition has unveiled a plan to slash tobacco excise by 80 per cent as part of a major crackdown on Australia’s booming illicit tobacco trade.
With a packet of 20 cigarettes starting at about $40, an equivalent 80 per cent reduction would push the starting price to roughly $8.
The Coalition says dramatically lowering the cost of legal cigarettes would remove the huge price advantage enjoyed by the black market, where illegal packs can sell for between $15 and $20.
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Alongside the proposed tax cut, a $200 million nationwide law-enforcement surge targeting illegal tobacco shops and organised crime networks would be launched.
Opposition Leader Angus Taylor said the policy would hit criminal groups “where it hurts” by taking away their “massive price advantage”.
“You don’t bring organised crime to its knees by protecting its business model,” he said.
“You have to destroy the business model, and that’s what the Coalition’s policy will do,” he said.
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