Coalition vows to cut pack of cigarettes to $8 as major parties battle over tobacco tax
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The Coalition has unveiled its plan to slash the tobacco excise by 80 per cent, bringing the cost of a legal pack of cigarettes down to just $8 in comparison to One Nation’s $10, and Labor’s current $40 with no change to the excise.
In a pre-election pitch on Thursday, Opposition Leader Angus Taylor will vow to cut the excise, regulate vapes and nicotine pouches, put $60 million towards a public awareness campaign and another $200 million to boost law enforcement to combat illicit tobacco and the black market.
Opposition Leader Angus Taylor has unveiled his anticipated tobacco plan. Sitthixay Ditthavong
The Parliamentary Budget Office has costed the Coalition’s policy and found it would increase tax revenue by about $8 billion over the first four years, encouraging smokers to buy tax-levied legal cigarettes.
That figure is about double the current forecast.
Taylor said the current policy protects the business model of organised crime while his plan would disrupt it by taking away their customers and profits.
“We need to smash the business model of organised crime in this country, and that is what an 80 per cent cut to the excise, combined with $200 million of law enforcement, will bring that business model to an end by taking away the customers, taking away the profits,” he told reporters.
“That is how we kill that business model, and that is how we defund organised crime in these areas.”
Taylor will take the policy to the next federal election but called on the government to implement his plan now.
“The reality is that the government has created the worst of all possible worlds: more crime, more smoking, and the result is Australians are worse off and less tax revenues for the government,” he said.
“It’s been a complete disaster.”
Smoking is the largest preventable cause of cancer deaths in Australia.
The associated healthcare costs total an estimated $6.8 billion each year, but the federal government only received $4.13 billion in the tobacco excise in the 2025-26 financial year.
Treasury estimates the excise revenue will continue to drop to $2.1 billion over the next four years as smoking rates fall and illicit tobacco consumption grows, creating a thriving black market and associated crime.
Australia has some of the most expensive tobacco in the world, with the average price of a legal pack of 20 cigarettes costing about $40 to $50.
The tobacco excise accounts for up to $30 of the final cost of a pack.
One Nation unveiled an idea to cut the tobacco excise by 75 per cent and pause indexation for three years in August, reigniting debate on the policy.
Pauline Hanson’s plan would take the average price of a legal pack of cigarettes from $40 to $10.
Deputy Opposition Leader Jane Hume denied accusations that the Coalition was copying One Nation’s plan, telling Today the difference lies in the detail of the policy.
Cutting the tobacco excise could take a toll on Australia’s declining smoking rates. iStock
“We are the only party that has done the work to make sure that we have an end-to-end policy,” she said.
“This is fully costed, full modelled and it will genuinely disrupt the organised crime that has taken over the market.
“This is not a slogan. This is not a headline. This is a solution to a policy problem, a failure of this government.”
Labor has ruled out cutting the tobacco excise and denied that it would help kill the black market.
Instead, the federal government is supporting law enforcement to combat the surge in crime.
The Australian Medical Association (AMA) said the Coalition’s proposal was reckless, would undermine decades of public health efforts, and drive people back to smoking.
“Tobacco taxation has been a major contributor to Australia’s historically declining smoking rates,” AMA president Dr Danielle McMullen said.
“Lower cigarette prices would likely increase smoking rates, particularly among price-sensitive groups such as young people and people experiencing socioeconomic disadvantage, widening health inequities.
“There’s also very limited evidence that dramatically cutting tobacco taxes is an effective long-term public health strategy, and it could result in increased legal tobacco consumption even if illicit trade falls.”
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