The Coalition's proposal to slash tobacco excise by 80% has drawn sharp criticism from health experts, who argue that tougher enforcement of existing laws and better monitoring of cigarette imports should be the priority. The shadow health minister, Anne Ruston, defended the plan on Friday, saying it would help take back market control from organised crime, but experts warn it could reverse Australia's progress in reducing smoking rates.
Coalition's plan and expert backlash
Ruston told ABC's Radio National that the combined package, which includes the excise cut and a $200m law enforcement push, would make it harder for children to access tobacco products. "We are hoping that the combined package of what we're proposing here, not just the dropping of the excise, but the regulation of the market and making it certainly more difficult for children to access these products," she said. "In the enforcement surge and the anti-smoking and anti-vaping campaigns, we are hoping to put downward pressure on smoking rates."
However, Prof Becky Freeman, a tobacco control expert at the University of Sydney, said the first step should be enforcing existing laws to curb tobacco supply and targeting criminal supply chains. "There's no point in having laws if we don't enforce them," she said. "Illicit tobacco markets are actually shaped by supply chains, enforcement capacity, organised crime opportunity, how the industry behaves, retail controls, border dynamics, and, of course, the political pressures."
Impact of an 80% excise cut
Freeman noted that cigarettes are inexpensive to manufacture, meaning an 80% tax cut would likely drive illicit prices even lower. "What would happen in response if this 80% tax cut went through? Illicit prices would get lower as well," she said. "If you don't actually dismantle those illicit supply networks, you are not going to be able to beat them on price." She also suggested reducing the number of legal tobacco retailers, noting there are an estimated 40,000 retailers across Australia.
Dr Cheneal Puljevic, a health expert at the University of Queensland researching illicit markets, emphasised the importance of reducing tobacco demand through public health campaigns. "It's been decades since we've had a strong public health campaign," she said. "I think that we should be using the excise to make nicotine replacement therapy free, and basically throwing everything we can at promoting smoking cessation and helping people to quit smoking."
Monitoring supply and alternative approaches
Puljevic highlighted effective methods for monitoring tobacco supply at borders, such as international track and trace systems that allow authorities to check when and where shipments exit supply chains. "There's just a million things that we could be trying first before we do something as drastic as lowering taxes," she said.
Independent economist Chris Richardson backs a temporary excise reduction combined with increased enforcement to prevent billions of dollars in profits flowing to organised crime. "We need shock and awe for the legal product. You know, the combination of its price going down due to a tax change, and the effective cost of business of organised crime going up as a result of better enforcement," he said. "You don't have to have really low taxes on tobacco forever, but you have to have them as a circuit breaker until we can get the rule of law back in this market."
Rising illicit tobacco consumption and revenue decline
Illicit tobacco accounted for 80% of cigarettes smoked by Australians in 2025, with untaxed packets costing as little as $10 compared to over $40 for a legal packet. The federal government raises nearly $30 per legal packet, about 75% of the cost. Federal excise revenue peaked at $16.3bn in 2019-20 but was expected to generate only $5.5bn last financial year and $4.8bn this year.
The Coalition, along with One Nation, has called for a drastic excise reduction. Opposition leader Taylor unveiled the policy on Thursday, pledging to cut the excise by 80% from around $30 per 20-pack to about $6. The Liberals also plan to legalise and regulate vapes and nicotine pouches, and spend $200m on enforcement, with increased funding for the Australian Border Force and federal police.
Freeman concluded that research shows high cigarette costs are one of the most effective deterrents to smoking. "Making cigarettes cheap everywhere to everyone in every single shop all across the country will take away that price pressure," she said.
