Cigarette prices in Australia have increased again after the federal tobacco excise rose by 2% as part of the government’s regular indexation schedule.
The adjustment occurs every six months and is linked to changes in wages, continuing a long-term strategy aimed at reducing smoking rates.
Since 2020, tobacco excise has increased by around 60%. Taxes now account for roughly three-quarters of the retail price of a legal packet of cigarettes, which can cost more than $40 for a pack of 20.
Higher prices have historically been used as a public health measure to discourage smoking, particularly among younger Australians.
However, concerns are growing that rising prices are pushing smokers towards illegal tobacco products.
Black-market cigarettes are reported to sell for between $10 and $15 a pack, significantly cheaper than legal products.
Estimates from Australia’s Illicit Tobacco and E-Cigarette Commissioner suggest illegal cigarettes now account for about half of all tobacco consumed in the country.
The growth of the illicit market has also affected government finances, with lower excise collections contributing to a multi-billion-dollar shortfall in expected revenue.
Some economists and public health experts have argued for a pause in further tax increases while the government addresses the illegal trade.
The federal government has so far rejected calls for a freeze and has instead committed hundreds of millions of dollars to enforcement efforts.
Treasury officials have recently indicated they are reviewing how consumer demand for cigarettes responds to further price increases.
