One Nation wants to hand Big Tobacco a tax break
What would you do if you ran a cigarette company and your business model, like your customers, was diseased and dying? If you’d seen your market shrink as smoking rates declined, and you were massively undercut by illicit operators?
In the time-honoured tradition of Big Tobacco, you’d get creative. Through your front groups, industry-funded modelling, and lobbyists roaming the halls of parliament with sponsored passes and deep pockets, you’d present a tax cut as the “best” way to solve the problem.
And once that campaign gained momentum, you’d expect other interested parties – including MPs – to adopt your policy thinking.
For arguments sake, let’s step through that excise cut.
One Nation claims 75 per cent would bring a pack of $46.50 cigarettes down to about $21 or $22 – a big assumption since there’s no guarantee tobacco companies would pass on those savings. But even at that price, there’s no evidence smokers will return to the taxed tobacco market in sufficient numbers to make a difference.Illicit cigarettes can cost as little as US20¢ a packet to manufacture. No tax cut can compete with that.
Price-matching organised crime is a race to the bottom where the community loses and Big Tobacco wins.
What we do know from decades of evidence is that higher prices and excise are the most effective tools for reducing smoking.
Higher prices discourage young people from starting, encourage smokers to quit, and help prevent relapse. Cutting tobacco taxes throws away hard-won progress in reducing smoking and smoking-related deaths, adding to already high healthcare costs.
If tobacco tax cuts were the gold standard in curbing the illicit market, then we would expect to see this adopted by other countries with a tried-and-true path for Australia to follow. But that’s not the case.
In an opinion piece last week, former Australian Federal Police and Australian Border Force Officer Rohan Pike cited Canada’s historical 1994 tobacco tax cuts and enforcement model, focusing on Quebec as an example Australia should emulate, claiming it fixed the illicit problem.
However, this was a radically different scenario. Tobacco companies themselves were fuelling the contraband cigarette market, then cleverly engineered a tax cut as a solution to the problem they helped create.
By 1999, Canadian experts reviewing that period said the move had “a profound and negative impact on both the health of Canadians and the finances of their governments”.
Lowering the tax led to increased smoking, particularly among young people while tobacco companies emerged as the major beneficiaries. By 2009, the Canadian government defined the illicit market at 40 per cent in Quebec.
The answer to our current crisis must be much bolder and targeted. Illicit tobacco needs to be far more difficult and less profitable to import, distribute and sell.
Firstly, every single state and territory needs stronger tobacco retailing laws, including closure powers and eye-watering penalties – with enough trained compliance officers to monitor retailers and apply sanctions. The states and territories need to be sustainably funded by the federal government to build a skilled and reliable enforcement workforce.
Secondly, we must strengthen our licensed retail environment. There are 40,000 places to buy a packet of cigarettes in Australia, despite only 5.6 per cent of Australians smoking daily. Tobacco is more available than bread and milk, and that easy access undermines every effort to help people quit and prevent young people starting.
That’s why licensing needs to be a genuine gatekeeping system that seeks to limit the number of retailers, not a register of businesses allowed to sell tobacco by filling in a form. More than 60 per cent of shops subject to NSW closure orders for illicit tobacco are licensed to sell tobacco legally. That’s not a licensing system doing its job.
We need to progressively reduce the number of tobacco outlets and ensure cigarettes are only sold by businesses that can demonstrate robust systems for security, governance, reporting and traceability. Raising the bar on who can hold a licence will create a smaller, more compliant retail environment, making enforcement easier and illicit sales harder.
Thirdly, we need to invest in the border and for the Commonwealth to establish a national wholesaler and importer licensing scheme, so tobacco can enter and move through Australia via vetted, accountable businesses.
This would allow government to track importers and distributors, require wholesalers to supply only licensed retailers, and disrupt illicit supply before it reaches shopfronts.
As long as criminal networks can tap into a vast international surplus of tobacco and flood Australia with cheap illicit products, enforcement on the ground will remain an uphill battle.
The bulk of illicit products are coming through our maritime borders. According to former ABF commissioner Michael Outram, publicly available data indicates only 1 per cent of our containers are being scanned and “we could better”.
Finally, we need much better supports to help the 90 per cent of smokers who want to quit. We need to have combination nicotine replacement therapy available to anyone who picks up the phone to call Quitline.
This is not a choice between tackling organised crime and protecting public health. We can do both, but we need to pull on multiple levers instead of handing a tax concession to an industry that profits from killing 66 Australians every day.
Laura Hunter is CEO of Australian Council on Smoking & Health. This article appeared in the Australian Financial Review on Saturday 22 August, 2026.