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Premier Chris Minns has called for the “massive” Commonwealth excise on tobacco products to be reviewed, warning that present arrangements risk drawing police away from domestic violence and organised crime.
The call comes in the context of declining excise revenue alongside a thriving, normalised black market for cigarettes, which are widely available under the counter and are often illegally imported.
“The current situation is intolerable,” Minns said on Sunday 1 June, adding that something has “gone wrong” with current policy settings, prompting smokers to move to the illicit market rather than curtail their smoking habits. The premier noted he was not calling for the tax to be scrapped altogether.
“We’ve got to either allocate police resources to confronting illegal tobacco sales, or we should have a common-sense look at the massive excise.”
Minns said that he is “completely in support of the public health messaging, but you’d be crazy to just turn a blind eye to the proliferation of illegal tobacco sales and think to yourself, isn’t there a better way of allocating public money?”
Plummeting tobacco revenue
Federal revenue from the excise and from the equivalent customs duty peaked at near $18.3 billion in the 2020 financial year, falling to about $11.9 billion over FY 2024. It is forecast to total approximately $7.4 billion in FY 2025 – less than half the figure accrued five years prior.
It is a dubious suggestion that tobacco use has so dramatically plummeted over this time. Further, increases in the excise have not led to higher revenue, with the case made that they have added to the allure of the black market.
Tobacco excise: cracks in the consensus
Although the tobacco excise has largely been a consensus policy, Minns is not the first legislator to publicly call for its severity to be reconsidered. Two Queensland MPs, Nationals member Llew O’Brien and Liberal member Warren Entsch, made the same case last year.
O’Brien, a former police officer, told the ABC in October that the Commonwealth Government needs “to at least look at reducing excise and consider whether that will help get this under control.”
“Whilst this is unpalatable, I think we need to direct people back to the legal market.”
Entsch concurred. “If you think you’re going to tax yourself out of this problem, you’ve got to be kidding,” he remarked.
In 2014, Liberal Democrat MP David Leyonhjelm made headlines when he thanked smokers for their “truly staggering” generosity, referencing public income from the excise.
Fast forward to 2025, and in the premier’s mind, the tax is playing into the hands of nefarious actors.
“The biggest supporters of the massive excise on tobacco sales in New South Wales are probably organised criminals, because it’s created a giant black market that they can exploit on every street in every suburb.”
Not all on board
Federal treasurer Jim Chalmers defended the excise, whilst admitting that illegal sales had siphoned revenue.
“Tobacco excise is an important public health measure to encourage people to give up smoking,” the treasurer said.
State opposition leader Mark Speakman also pushed back on the premier’s comments, arguing that the excise would have to be drastically reduced to dent the black market, indicating that it was not the best way of tackling the issue.
According to the Australian Institute of Health and Welfare, a government agency, 8.3 percent of Australians aged 14 and over were daily smokers in 2022–23. In the same period, seven percent of the population aged 14 and above were current users of e-cigarettes.
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