Australia: One Nation Proposes 75% Tobacco Tax Cut to Combat Australia’s Black Market
One Nation leader Pauline Hanson has proposed a 75% cut to Australia’s tobacco excise to dismantle a booming illicit market controlled by organized crime. The policy, which includes a three-year indexation freeze, aims to align legal cigarette prices with cheap black-market alternatives to eliminate criminal profit margins.
The Economic Impact of High Tobacco Taxation
Australia is currently the most expensive country in the world to buy cigarettes. Over the past six years, excise rates for a pack of 20 have risen from $18.99 to $30.56. One Nation MP Barnaby Joyce argued that high taxes have directly funded criminal syndicates.
“If you keep on putting up the price of cigarettes, you are going to get more mafia,” Joyce said. “The only way we can deal with the criminality is to bring back the price of legal cigarettes into the same realm as where the illegal ones are.”
| Pricing Metric (Pack of 20) | Current Cost | Proposed Cost (One Nation) |
|---|---|---|
| Excise Tax Rate | $30.56 | ~$7.64 |
| Average Retail Price | $46.50 | $21.00 – $22.00 |
Rising Crime and Collapsing Revenues
The Australian tobacco commissioner estimates that at least half of all tobacco consumed in the country is sourced from the black market. This shift cost the federal government between $7.7 billion and $11.8 billion in lost tax revenue last financial year. In Victoria, turf wars over the illicit market have caused more than 200 firebombings since early 2023.
Hanson stated that the current tax policy has failed. “It has handed a multi-billion-dollar market to organised crime while excise revenue collapses,” Hanson wrote on social media. “Cut the tax. Smash the black market. Cut off the cash for organised crime.”
Government and Medical Opposition
Treasurer Jim Chalmers rejected the proposal, confirming the government will instead focus on law enforcement, backed by an extra $350 million in resources. “The government’s focus is on the compliance side; [an excise cut] is not something we are proposing,” Chalmers said.
The Australian Medical Association (AMA) also opposed the cut. AMA President Danielle McMullen previously warned that reducing the excise would not deter illicit trade, noting that black markets persist even in countries where tobacco is cheap, such as the Philippines and Vietnam.
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