Illicit tobacco war in Australia sparks call for Treasurer Jim Chalmers to slash cigarette taxes

As the illicit tobacco war heats up across the country, Treasurer Jim Chalmers is under pressure to cut cigarette taxes. Vote in our poll and have your say.

Treasurer Jim Chalmers is under pressure to cut cigarette taxes to reduce Australia’s booming tobacco black market.

Deakin University Criminologist James Martin has urged the federal Treasurer to cut, or at least freeze, tobacco excise.

But Mr Chalmers’ office rejected cutting cigarette taxes, saying they were “designed to encourage smokers to quit”.

It comes amid a bloody battle for control of the illicit tobacco industry, which was linked to the murder of Sam “The Punisher” Abdulrahim last month.

Iraqi-based convicted heroin trafficker Kazem (Kaz) Hamad, who was deported from Australia in 2023, has been accused of being a major player in the illicit tobacco industry.

However, it is not suggested he was involved in Abdulrahim’s murder.

Dr Martin said higher taxes pushed people into the black market.

“It’s a no-brainer, every tax increase, if you look at it from the perspective of Kaz just increases his market share,” he said.

The senior lecturer said smokers had become priced out of the market, forcing them to buy illicit tobacco, which sells at around $20 a packet compared with $60 a packet for legal cigarettes.

He pointed to Sweden’s experience where smoking rates have declined even though legal cigarettes are half the price of those in Australia.

Treasurer Jim Chalmers is under pressure to cut cigarette taxes to reduce Australia’s booming tobacco black market. Picture: NewsWire / Martin Ollman

However, critics claim Sweden’s success, with only 6 per cent of the population smoking, masked the amount of people using snus [a tobacco lolly] or chewable tobacco and vapes.

There were 50,000 detections of illegal cigarettes at Australia’s borders in 2023/24.

That led to 1700 tonnes of tobacco and 1.8 billion cigarettes being seized, with the total value of that tax lost hitting $3 billion.

Former Labor Minister Nicola Roxon hiked tobacco taxes by 25 per cent in 2010 and was lauded for her 2011 Plain Packaging Act, which was considered a win over “big tobacco”.

Former Labor Minister Nicola Roxon hiked tobacco taxes by 25 per cent in 2010.

The tax hikes have dramatically increased the price of cigarettes, which opened the door for a burgeoning black market.

A source claimed: “The current situation is entirely the result of successive governments’ actions.

“The widespread sale of illegal tobacco by retailers across Australia highlights their failure to tackle the root cause – excessive taxation and inadequate enforcement.”

Federal Opposition health spokeswoman Anne Rushton said “any new measures must be evaluated to ensure they do not exacerbate nor increase the already-thriving black market.”

But she urged the government to do more to “crack down on these organised crime gangs,” with her party pledging $250 million extra for policing.

“A Dutton Coalition Government will put 10 times more funding towards law enforcement than Labor to crack down on the out-of-control black market in illicit tobacco and vaping products,” she said.

“It is clear that we need a tough cop on the beat to respond to the lack of real action from the Albanese Government, which has allowed the illicit tobacco black market to thrive.”

The Australian Taxation Office revealed it lost $2.7 billion of revenue from tax in a year due to the illicit tobacco market.

A statement from a government spokesperson said: “The changes to the tobacco excise are designed to encourage smokers to quit.

“We’re taking decisive action to end the trade of illicit tobacco with $188.5 million to the ABF.

“After a decade of delay and inaction from the Liberals, the gains of Labor’s world-leading plain packaging reforms had been squandered and the poorest and most marginalised Australians have paid the price.”

More than 400,000 Australians smoke illicit tobacco products, most commonly Manchester and Double Happiness brands.