Should the tobacco tax be reduced? MPs speak out as cigarette prices soar and illegal black market spirals 'out of control'Should the tobacco tax be reduced? MPs speak out as cigarette prices soar and illegal black market spirals 'out of control'Australia's tobacco excise is among the highest in the world and critics believe it's fuelling a black market.
Mr O'Brien — who served as a police officer before entering federal parliament — said the ever-increasing tax was well-intentioned, but it's had the unintended consequence of fuelling a black market, He says shops selling illegal cigarettes are popping up in Cairns, in his electorate of Leichhardt, and he often sees people queued up outside these outlets.Warren Entsch, the federal member for Leichhardt, says the tobacco excise needs to be reduced to break the business model of illegal operators.Mr Entsch says legitimate retailers are going broke because they cannot compete with stores openly selling under-the-counter products for half the price.
Despite the significant tax increases, the tax revenue has collapsed from a peak of $16 billion in 2019/20 to $9.8 billion in 2023/24 — a fall of 39 per cent in four years. "Reading backwards from the official numbers, the use of illegal tobacco in Australia has absolutely roared in the last handful of years," he said.
"We've overworked one element of the mix, the tax, and underdone the enforcement side of it, and those two need to be in better sync with each other."