Australia’s tobacco excise has reached a record $1.55274 per cigarette, as the latest tax increase takes effect from September 1.<\/p>\n
It comes as business groups warn that high legal prices have driven consumers towards an illicit market which accounts for about 80 per cent of nicotine consumption.<\/p>\n
The tobacco excise rate increased on Tuesday under the twice-yearly indexation system, with the latest adjustment based on an AWOTE indexation factor of 1.016<\/a>.<\/p>\n The new rate means the excise component alone on a standard packet of 20 cigarettes is about $31.05, with the cost of legal packets between $40 and $60.<\/p>\n With illegal cigarettes selling for about $15-20, the latest excise increase puts further pressure on the government to reconsider its approach to tobacco taxation.<\/p>\n The Australian Bureau of Statistics recently estimated 80 per cent of total nicotine consumption<\/a> came from illicit sources in 2025 \u2013 across cigarettes, vapes and other nicotine products \u2013 up from 12 per cent in 2017.<\/p>\n The ABS said the quantity of nicotine consumed in Australia increased by almost 40 per cent between 2017 and 2025, while legal tobacco consumption fell sharply.<\/p>\n The ABS also found that legal tobacco prices have almost tripled since December 2016, increased in part by successive tobacco excise increases.<\/p>\n The figures have intensified the political battle over the tobacco tax, with concerns that higher prices have not compensated for the public health benefit.<\/p>\n Small businesses feel the impact<\/p>\n The Council of Small Business Organisations Australia told News24.com.au that the consequences of the excise were extending well beyond lost tobacco sales.<\/p>\n COSBOA chief executive Skye Cappuccio said legitimate small businesses were being forced to absorb costs associated with the illicit market.<\/p>\n \u201cCOSBOA remains highly concerned about the broader impact of the illicit tobacco market on legitimate small businesses,\u201d Ms Cappuccio said.<\/p>\n \u201cAs a result of the illicit tobacco market some small businesses are facing significantly higher insurance premiums, or difficulty obtaining cover at all.\u201d<\/p>\n There have been reports that it’s \u201calmost impossible\u201d to insure stores selling tobacco<\/a> products due to arson attacks committed by gangs and criminals.<\/p>\n Ms Cappuccio said governments needed to ensure legitimate businesses were not placed at a disadvantage by the regulatory system.<\/p>\n \u201cWhatever the taxation settings, governments need to ensure they are not creating conditions where legitimate businesses are placed at a disadvantage while illegal operators continue to trade outside the system,\u201d she said.<\/p>\n \u201cGovernments must work with law enforcement and regulators to address illicit tobacco activity. Legitimate small businesses and neighbouring property owners should not be left carrying the financial consequences of illegal activity beyond their control.\u201d<\/p>\n Retailers call for excise cut<\/p>\n Meanwhile, the Australian Retail Council has backed a reduction in tobacco excise as part of broader reforms to tackle illicit tobacco and organised crime.<\/p>\n ARC chief executive Chris Rodwell said the scale of the problem justified a change in approach.<\/p>\n \u201cThere is a clear case for an excise cut. Few well-intentioned policy decisions have delivered social and economic consequences this serious,\u201d Mr Rodwell said.<\/p>\n \u201cA black market has flourished, organised crime and associated violence have grown, legitimate retailers have been severely hampered and the nation\u2019s tobacco excise revenue has collapsed.<\/p>\n \u201cOn any measure, the current approach has been a failure. We need to set a new path that protects public health, restores control to legitimate and regulated retailers, and wipes organised criminals out of Australia\u2019s tobacco market.\u201d<\/p>\n The Australian Association of Convenience Stores also called for a cut to the tobacco excise.<\/p>\n \u201cTobacco tax has soared far beyond inflation, legal prices have exploded and organised crime has taken control of the market,\u201d AACS CEO Theo Foukkare said.<\/p>\n Mr Foukkare said it seemed like \u201ceveryone in Australia knows how to fix this problem, except for the federal Labor government\u201d.<\/p>\n One Nation, Coalition push for tax cut<\/p>\n One Nation has called for tobacco excise to be slashed<\/a> by 75 per cent in order to combat the booming black market.<\/p>\n \u201cLabor\u2019s tobacco tax has failed. It has handed a multibillion-dollar market to organised crime while excise revenue collapses,\u201d Ms Hanson said recently.<\/p>\n \u201cOne Nation will cut tobacco excise by 75 per cent and freeze indexation for three years. Cut the tax. Smash the black market. Cut off the cash for organised crime.\u201d<\/p>\n The proposal was a significant escalation from One Nation\u2019s earlier call for a 50 per cent reduction.<\/p>\n The Coalition taskforce set up to tackle illegal tobacco<\/a> has proposed cutting the excise by up to 80 per cent below current levels.<\/p>\n The taskforce, led by Liberal MP Mary Aldred and Liberal Senator Richard Colbeck, also recommended reviewing state and federal law enforcement cooperation.<\/p>\n Opposition Leader Angus Taylor has not yet formalised the Coalition\u2019s final detailed tobacco excise policy.<\/p>\n The Albanese government has so far rejected calls for a substantial reduction, arguing that there is no demonstrated tax level that would eliminate the illicit market.<\/p>\n Labor\u2019s Assistant Treasurer Daniel Mulino recently said there was no plan to cut the tobacco excise and the government would instead focus on enforcement.<\/p>\n \u201cOur priority is to work more closely with state and territory governments,\u201d Mr Mulino said.<\/p>\n \u201cQueensland and South Australia have made real progress when it comes to these illegal tobacco shops. We believe a lot more can be done on that front.\u201d<\/p>\n Nicotine consumption<\/p>\n While the proportion of Australians using nicotine products has fallen<\/a>, the amount of nicotine consumed has increased, according to separate AIHW and ABS measures.<\/p>\n At the same time, excise revenue has plummeted from $16.3 billion in 2019-20 to about $8 billion in 2024-25, with forecasts predicting it to fall to about $2 billion by 2030.<\/p>\n Meanwhile, the rate of daily e-cigarette use increased from 3.5 per cent in 2022-23 to 3.6 per cent in 2025.<\/p>\n The rate of snus consumption increased from 0.4 per cent in 2022-23 to a 0.8 per cent in 2025, with a further 1.8 per cent using oral nicotine pouches.<\/p>\n The rate of daily tobacco smoking dropped to 5.6 per cent in 2025, down from 8.3 per cent in 2022\u20132023.<\/p>\n Read related topics:Tobacco Black Market<\/a>Labor Under Fire<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Australia’s tobacco excise has reached a record $1.55274 per cigarette, as the latest tax increase takes effect 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