Over the last two years, the proportion of Australians reporting to have smoked illicit tobacco has doubled.
According to the 2026 National Drug Strategy Household Survey, 34 percent of current smokers said they used illicit tobacco, up from 17 percent in the previous survey in 2022-2023.
At the same time, estimates from the Australian Bureau of Statistics indicate illicit sources account for 80 percent of nicotine consumption in 2025, compared with 12 percent in 2017.
This trend has occurred while daily smoking rate continue to fall, sitting at an all-time low of 5.6 percent for all people aged 14 and over.
One Nation’s Excise Proposal
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The aim is to stub out the appeal of black market products and help recover lost excise revenue.
“People are sick of the firebombing, shootings, extortion and killings. They are sick of watching tobacco shops burn, while organised crime takes control of the market,” One Nation leader Pauline Hanson said.
Economist Says Tobacco Tax No Longer Working
Economist Chris Richardson warns organised crime syndicates were now the “Big Tobacco in Australia” controlling four-fifths of the market.
Richardson said the sensible policy aims had been sidelined in favour of “putting the boot” into legal tobacco firms.
“But then we took taxing tobacco to an extreme, and that attempt at prohibition-by-price hasn’t been working since at least 2019“
Meanwhile, economist Saul Eslake said he was “gradually and reluctantly” coming around to the idea of cutting the excise.
“Before I finally support that, I want to see more evidence that we can ‘put the genie back in the bottle’ by cutting the excise significantly, and thus eliminating the potential for large profits which have created the ‘black market’ in tobacco products,” he told The Epoch Times.
He says there needs to be other ways to discourage people from smoking.
“Excise reform is necessary to arrest the growth of the illicit tobacco market and return consumers to a regulated framework,” representatives said.
“This will get Australia back on course in reducing smoking rates and removing the profit incentive that is driving organised crime and violence in our communities.”
Price the Primary Reason Smokers Quit: Survey
Yet public health advocates say any move on excise could undo two decades of shrinking smoking rates.
A 2026 National Drug Strategy Household survey found cigarette prices were an important factor in influencing smoking behaviour.
Australian Council on Smoking and Health CEO Laura Hunter warned that cheaper cigarettes would be counterproductive.
“Higher prices discourage young people from starting, encourage smokers to quit, and help prevent relapse,” she told The Epoch Times.
Hunter added there was no guarantee tobacco companies would pass the full savings on to consumers. At the same time, she said illegal cigarettes cost so little to manufacture that criminal suppliers could continue undercutting the legal market.
“Illicit cigarettes can cost as little as US20 cents a packet to manufacture. No tax cut can compete with that,” she said.
“Price-matching organised crime is a race to the bottom where the community loses and Big Tobacco wins.”
