Federal Member for Lyne Alison Penfold says slashing the tobacco excise by 80 per cent is the only way to smash organised crime’s grip on the illegal cigarette trade, as fresh warnings emerge that a tax cut alone may not be enough to kill off the black market.
Ms Penfold has backed the Coalition’s plan to attack what she calls the criminal business model behind illegal tobacco, which would cut the excise on a standard packet of 20 cigarettes from around $30 to just over $6, alongside a $200 million nationwide law enforcement surge.
“Illicit tobacco is not a victimless crime. It has become big business for organised crime,” Ms Penfold said.
“The Coalition’s plan attacks the economics making this market so profitable, while giving law enforcement the resources to smash the gangs behind it.”
The plan would also bring vapes and nicotine pouches into a legal, regulated and taxed adult market, and fund a national education campaign warning of the dangers of smoking and where money spent on illegal tobacco ends up.
Ms Penfold said legitimate retailers across the electorate were paying the price for the failure to control the illegal trade.
“I have heard this message too often across the electorate. Small businesses doing the right thing should not have to compete against criminals operating outside the law.
“But nor do I want to demonise Australians who have been drawn into the illegal market because the price difference has become so enormous.”
She said the Coalition had worked with the independent Parliamentary Budget Office to model the changes.
“There is a big difference between announcing an idea and developing a policy that has been tested, modelled and can actually be implemented,” Ms Penfold said.
Federal Member for Parkes Jamie Chaffey says Australia’s tobacco trade is a national organised crime crisis fuelling firebombings, extortion and violence.
“You don’t bring organised crime to its knees by protecting its business model,” Mr Chaffey said. “You have to destroy the business model, and that’s what the Coalition’s policy will do in the Parkes electorate.”
But the tax cut push is not without its sceptics. Former detective and drug squad team leader Charlie Bezzina said he doubted either the Coalition’s 80 per cent cut or One Nation’s rival 75 per cent proposal would be enough to change smokers’ behaviour.
“Realistically, I don’t think they can bring down the excise to match the cost,” Mr Bezzina said. “Even if there is $1 to be saved, or $2 to be saved, the illegal market is going to continue to thrive … we’re a selfish race.”
Federal Health Minister Mark Butler said there was no evidence reducing the excise would make a “material difference” to the illegal market without doing harm to smoking rates.
About 80 per cent of all tobacco consumed in 2025 was illegal, up from 12 per cent in 2017, according to estimates from the Australian Bureau of Statistics.
The Coalition’s plan is costed on the basis that a black market pack currently sells for $15 to $20, with Opposition Leader Angus Taylor arguing that reducing the legal price to between about $16 and $26 would close the gap. But Australian Association of Convenience Stores chief executive Theo Foukkare says the evidence points to real-world prices already being lower than that.
“A pack of smokes today in Australia is between $12 and $15, that’s actually what consumers are paying more than eight times out of 10 if you’re an adult,” Mr Foukkare said.
Ms Penfold said the Government now needed to respond to the Coalition’s plan.
“The Coalition has put a comprehensive plan on the table. Labor now needs to tell Australians what it is going to do.
“We need to shut down the criminal supply chains, protect legitimate businesses and stop handing organised crime an extraordinarily profitable market.”
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