A Coalition government would cut tobacco excise by 80 per cent, legalise and tax vapes and nicotine pouches, and spend $260 million on enforcement and advertising, Opposition Leader Angus Taylor announced on Thursday. Excise on a packet of 20 cigarettes would fall from about $30 to $6.
A legal packet now sells for $40 to $50. If retailers passed on the full cut, the price would fall to between $16 and $26, against the $15 to $20 charged for illicit packs. Vapes would be taxed at 50 cents per millilitre of liquid and nicotine pouches at 2.5 cents per milligram of nicotine. The package includes $200 million for a state and federal law enforcement surge and a $60 million public awareness campaign over three years. The excise cut would be reviewed after two years.
The pitch is fiscal as much as criminal. The Coalition says Parliamentary Budget Office modelling it commissioned shows the package would raise about $8 billion over its first four years, roughly double current forecasts. The costing has not been released. Shadow Treasurer Tim Wilson put the gain at "about $2 billion a year because it will stop people buying products from the black market and will lead to them buying it in the real market".
Treasury's own forecasts show the revenue the excise is meant to raise is falling regardless. The May Budget cut expected tobacco excise receipts by $8 billion over five years, citing "continued weakness in tobacco excise collections and a weaker outlook for excisable tobacco volumes". Receipts were $7.8 billion in 2024-25. Treasury expects $4.1 billion this financial year and $2.1 billion by 2029-30.
“This is a bad business that we have to destroy, and I am confident these settings will do it," Taylor said. He described organised crime as "waging a campaign of economic terrorism on Australians".”
The Coalition is the second party in three weeks to propose a cut. One Nation announced a 75 per cent reduction with a three-year indexation freeze on 18 August, when Treasurer Jim Chalmers said the government's focus was on compliance and a cut was "not something we are proposing". Wilson denied on Thursday that the Coalition had copied the One Nation policy.
Social Services Minister Tanya Plibersek said the plan "will kill people". "Like seriously, we have some of the lowest smoking rates in the world because cigarettes are expensive," she said. Daily smoking among Australians aged 14 and over fell from 8.3 per cent in 2022-23 to 5.6 per cent in 2025, according to the National Drug Strategy Household Survey.
Becky Freeman, a professor of public health at the University of Sydney, called the policy "a terrible idea". "It is absolutely not going to reduce smoking rates in this country, which is what we need to focus on," she said. "If we were to lower the price of regulated products, the criminals can just lower their prices as well." Laura Hunter, chief executive of the Australian Council on Smoking and Health, said the country's record-low smoking rates were "the result of decades of policies that are designed to make cigarettes less affordable, less available in the community, and less normalised".
The Liberal Party stopped accepting tobacco industry donations in 2013. The Nationals did not. Returns published by the Australian Electoral Commission in February record Philip Morris Limited giving $137,500 to the National Party of Australia on 4 April 2025, and British American Tobacco Australia paying $88,000 in the same financial year to Laneway Assets Pty Ltd, the trustee of the party's National Policy Forum Trust. The same trust received $100,000 from Philip Morris and $106,700 from British American Tobacco in 2023-24. Nationals leader Matt Canavan said on Thursday that cutting the excise "will take billions out of criminal gangs".
Both sides of politics built the current rate. Excise rose 25 per cent under the Rudd government in 2010, then by 12.5 per cent a year from 2013 to 2020, and the Albanese government added three years of 5 per cent increases on top of indexation from 2023. Health Minister Mark Butler argued last week that even abolishing the excise would leave legal cigarettes dearer than the illicit product.
The Coalition has not said when it will release the Parliamentary Budget Office costing. The excise cut, if legislated, would be reviewed after two years.
