Australia's illicit tobacco commissioner says cutting excise unlikely to end illegal trade

Australia's illicit tobacco and e-cigarette commissioner told a conference of economists that deep cuts in tobacco excise would be unlikely to stop the illegal cigarette trade. Amber Shuhyta said even effectively abolishing excise would leave room for profit, with criminal networks able to sell illegal cigarettes at $5 a pack.

She noted that organized crime groups have grown more networked and technologically sophisticated in recent years.

Factors beyond excise Separate research presented at the conference found illegal sales increased before the most recent excise rises, coinciding with reduced consumer stigma around buying bootleg products. Home Affairs chief economist Justin Douglas said the price of illicit tobacco had fallen to about 70 cents per cigarette by 2020, before a 5 percent excise increase in 2023.

Douglas linked the shift to broader changes in consumer spending during the cost-of-living pressures that followed COVID-related restrictions. He described an "industrialisation" phase in which larger criminal syndicates displaced smaller retailers.

Revenue and enforcement impact Up to four in five cigarettes now smoked in Australia are illegal. Legal consumption has fallen to record lows, cutting projected federal excise revenue from $27.3 billion to $15.4 billion for the 2025-26 to 2029-30 period.

Federal, state and territory governments spend more than $300 million combating the trade, which has been accompanied by at least 200 attacks on cigarette stores and an estimated three murders. Shuhyta said she has commissioned research on excise changes due for public release later this year.