02/09/2026
Cutting the cigarette tax risks undoing a health win
The Coalition has proposed cutting the to***co excise by 80 per cent — from about $30 to $6 on a standard pack — arguing with little evidence, that closing the price gap with illicit to***co will starve organised crime of its profits. https://www.abc.net.au/news/2026-09-03/coalition-unveils-plan-to-slash-to***co-excise/107109642
Illicit to***co is a real problem: illicit product is etimated to now makes up more than half of ci******es sold, and around 80 per cent of to***co, vapes and pouches combined. (3 Sep)
But the numbers don't add up. Even after an 80 per cent cut, a legal pack would still cost roughly $18–21. That's barely below, and maybe still above, the $15–20 illicit price, with nothing stopping illicit sellers from undercutting the price further.
Not surprisingly, fifteen public health bodies, including Cancer Council, Heart Foundation and the Public Health Association of Australia, warn that the cut would make ci******es more affordable, lift smoking rates, and hand billions in profit to multinational to***co companies while barely touching the black market it's supposed to kill. https://www.cancer.org.au/about-us/news-and-media/media-releases/health-bodies-unite-to-expose-big-to***cos-push-for-tax-cuts
Here's the part that should make everyone pause: the evidence is that the excise is working.
AIHW's 2025 National Drug Strategy Household Survey found daily smoking has fallen to a record-low of 5.6 per cent. That’s down from 8.3 per cent just two years earlier, and down from 19.5 per cent in 2001. So the raw smoking rate has diminished significantly with the increased excise and other initiatives to reduce smoking. That’s a real health bonus that also has economic benefits.
The decline in smaking rates has held steady right through the years that illicit trade has exploded. What did spike is illicit purchasing among smokers. That's up from 16.7 per cent to 34 per cent in the same survey. That's a customs, retail-licensing and organised-crime enforcement failure. It is not evidence the health policy and excise tax have failed.
The ABS's separate experimental ni****ne-consumption series (not the AIHW survey) found total ni****ne consumption up about 30 per cent since late 2021 (the figure Mr Taylor has quoted) but the ABS itself cautioned the estimate is experimental, and the data does not establish that the excise caused overall consumption to rise. The Coalition's "consumption is up 30 per cent, therefore the excise has failed" claim conflates two different, non-equivalent datasets.
The overall picture: on the health outcome the excise was designed to modify i.e. smoking prevalence, has worked quite effectively. The problem that has emerged is a supply-chain/enforcement/retail-regulation failure, not a health-policy failure, and the AIHW and ABS data don't support treating them as the same problem.
Treating a border-security and retail-regulation problem as if the fix is a single number on a tax schedule is exactly the kind of siloed policymaking that AHCRA warns against and populist political advocates use.
What's actually needed is a “Health in All Policies” approach. That means customs, retail licensing, criminal enforcement, health promotion and taxation working as a coordinated strategy, each part doing the job it's good at, instead of suggesting the excise will solve a problem it didn't create and dismantling a ground-breaking public health success in the process.
The $200 million enforcement surge and $60 million awareness campaign in the Coalition's package are policy moves worth having on their own merits. Bolting an 80 per cent tax cut onto them isn't positive as a health policy, it's a bet that the fastest way to beat the black market is to make legal ci******es cheap enough that the market stops worrying. And it’s a bet against better health and wellbeing that twenty-five years of falling smoking rates say would be a bad move.
AHCRA calls for to***co control policy to be developed jointly across health, customs, law enforcement and retail regulation portfolios, not through a focus on excise settings alone.
A future Coalition government would slash the to***co excise by 80 per cent, legalise and tax vapes and ni****ne pouches, and bolster law enforcement to shut down the illicit trade.