Liberal Leader Angus Taylor has proposed a significant reduction in tobacco excise, advocating for an 80% cut that would lower the price of a legal cigarette pack by approximately $30. This policy aims to counter the growing illicit tobacco market, which Taylor claims is fueling organized crime and reducing government tax revenue.
The Coalition's proposal, detailed in a report from a Coalition-led inquiry, suggests an immediate pause to the current excise and further investigation into the effects of lower taxes. The current excise, which adds about $1.55 to each cigarette, has pushed the average price of a pack of 25 to over $50. According to the Australian Bureau of Statistics, an estimated 80% of tobacco consumed in 2025 was illicit, a substantial increase from 12% in 2017.
Taylor stated that making legal cigarettes more competitive would directly combat the illegal trade. "I understand business, and sadly, this is a bad business that we have to destroy," he told ABC News Breakfast. "We've got the worst of all worlds right now, with rising smoking, rising crime, and the result of this is that there's less tax revenue for the government."
The Albanese government has resisted changes to the tobacco excise, which generates billions in annual revenue. Senior government minister Tanya Plibersek criticized the Coalition's plan, calling it a "race to the bottom" and warning that it would increase smoking rates. Greens senator David Shoebridge echoed these concerns, stating that the policy overlooks public health issues. However, deputy Liberal leader Jane Hume insisted the proposal was a genuine solution and not an imitation of One Nation's policies.
The Coalition's plan also includes $200 million for law enforcement and $60 million for a public health campaign aimed at discouraging smoking.
Recent Incidents Highlight Concerns
This announcement follows a firebombing incident in Melton, outside Melbourne, where a man was found with severe burns and is in critical condition. The blaze completely engulfed "The Boss" tobacco store, and police are treating the incident as suspicious. The firebombing underscores concerns about organized criminal activity linked to the illicit tobacco trade, which has also been associated with a wave of firebombings on retailers in major cities.
