It’s no secret that smoking has been on the decline in Australia, but here’s something that might surprise you: more than half of the cigarettes sold in the country now come from the black market. That’s right. It’s not just a small portion anymore—it’s a major issue that’s not only draining the government’s pockets but also undermining decades of hard work to reduce smoking rates.
The Rise of Illegal Cigarettes: How Tax Hikes Created a Black Market Boom
So, how did we get here? Well, the rise of black market cigarettes can largely be attributed to one thing: the skyrocketing excise taxes on tobacco products. Since 2010, the government has been aggressively raising tobacco taxes, hoping to drive people away from smoking by making cigarettes less affordable. While this strategy did lead to a drop in smoking rates, it’s also made legal cigarettes prohibitively expensive. In fact, a legal pack of 20 cigarettes now costs over AU$40, a far cry from what it used to be, details The Guardian.
Naturally, people who are still craving a smoke but don’t want to pay these sky-high prices have turned to the black market. On the illicit market, a pack of smokes can be found for less than AU$15—sometimes even as low as AU$10. As the price gap widens, more people are choosing the cheaper, illegal option, and this has caused the black market share to rise to as much as 55% to 60% of all cigarette sales in Australia, according to the government’s illicit tobacco commissioner.
The Toll on the Economy
What does this mean for taxpayers? A lot of lost revenue. The government is missing out on up to AU$11.8 billion every year due to the rise of black market cigarettes. That’s a huge chunk of change that could have gone into public health initiatives, education programs, or other services. The tax hike that was supposed to reduce smoking and fund health costs is now backfiring, as the illegal market is thriving, untaxed, and unregulated.
But it’s not just about money—it’s also about public health. Illegally sold cigarettes are not subjected to the same safety regulations as legal ones, and consumers are left exposed to potentially harmful products. Worse, organized crime groups have increasingly become involved in the black market, making it not just a public health issue, but a community safety one, too.
The Government’s Response
To combat this growing issue, the government has beefed up enforcement, pouring AU$300 million into anti-smuggling efforts over the past two years. In 2024-2025 alone, authorities seized over 2,200 tonnes of illicit tobacco. But despite this, the problem persists, with no easy solutions in sight. Some experts argue that reducing tobacco excise could reverse some of the damage, but the risk is that it could make the black market even more attractive.
The solution, according to Commissioner Amber Shuhyta, lies in stronger enforcement and public awareness—making it clear that buying illegal cigarettes is not just a cheap alternative, but a crime that hurts communities.
What Happens Next?
As it stands, the Australian government is stuck between a rock and a hard place. Cutting tobacco excise rates might offer a temporary fix to the black market issue, but it could undermine years of successful public health campaigns. On the other hand, continuing with high taxes could push more consumers into the hands of criminals. Either way, something needs to change. The growth of illicit tobacco in Australia not only threatens public health but also undermines government efforts to protect the economy and keep crime in check.
As it stands, Australians are at a crossroads. They face the consequences of rising costs on one hand and the dangers of illegal markets on the other. What happens next will depend on how the government balances taxation, enforcement, and consumer education. And, for now, it seems like the black market will continue to flourish unless there’s a serious shift in strategy. It’s a difficult battle, but it’s one that Australia can’t afford to lose.
