NSW premier calls for lower tobacco excise as black market cigarette sales boom

Australia Broadcast Center

5 days ago

NSW Premier Chris Minns has called on the federal government to consider lowering the tobacco excise, suggesting its current level may be contributing to the rise of illegal tobacco across the country.
In March it was revealed in the federal budget the bottom line had been dealt an almost $7 billion blow in tobacco tax revenue, as black market cigarette sales boom.
The treasury is forecasting $6.9 billion will be slashed between now and 2029 on the back of Australians turning to cheaper illegal tobacco or switching to vapes.
"We need to have a look at how big this excise is, how it's driving illegal tobacco sales in our community," Mr Minns said.
"And is it the best use of NSW Police time to be devoted to tobacco sales, when in the end the federal government's not getting the excise that they thought — they're not getting that tax that they would get from that massive increase."
Cigarette prices in Australia are considered to be one of the highest in the world, according to the World Health Organization, with taxes accounting for roughly three quarters of the price.
The justification for this excise, which was first introduced as a 25 per cent increase in 2010 and has increased in the years since, is reducing smoking rates.
In 2023, the federal government said the excise would grow by 5 per cent annually for three years, starting that September.
According to the Australian Institute of Health and Welfare, around one quarter of people who smoked in 2024 had smoked unbranded tobacco in their lifetime.
"I'm completely in support of the public health messaging, but you'd be crazy to just turn a blind eye to the proliferation of illegal tobacco sales and think to yourself, 'Isn't there a better way of allocating public money?'" Mr Minns said.
In a statement, federal Treasurer Jim Chalmers acknowledged "the significant problem of illegal tobacco".
"Tobacco excise is an important public health measure to encourage people to give up smoking," Mr Chalmers said.
"We are working with NSW and the other states and territories when it comes to the enforcement challenge with illegal tobacco."
He said the federal government had invested an additional $157 million in enforcement and compliance for tobacco in the recent budget.
James Martin, a senior lecturer in criminology at Deakin University, said high taxes combined with legislation permitting other avenues for nicotine consumption including vaping, created an environment for illicit tobacco to flourish.
He said it was worthwhile to question the government's taxing and spending priorities.
"Police forces are stretched around the country with more pressing crime problems," Dr Martin said.
"Whether that's intimate partner violence or terrorism, you name it — there's a real problem that police are facing with resource allocation as it is," he said.
However he said it was difficult to know how the government could respond to the booming black market.
"Because [federal Minister for Health] Mark Butler has said explicitly that any attempt to not even reverse tobacco tax, but just simply pause tobacco tax, would be raising the white flag for, you know, for big tobacco.
"And I think with that kind of rhetoric, it's difficult, it's difficult to de-escalate."