Key Points
- One Nation has proposed cutting tobacco excise by around 75% to reduce legal cigarette prices.
- The party argues high taxes have widened the price gap between legal products and illicit tobacco.
- The proposal comes as Australia continues expanding enforcement against illicit tobacco networks.
- Supporters say lower prices could weaken black-market demand, while critics warn of potential public-health impacts.
- The proposal remains a political policy position and is not current Australian government policy.
2Firsts
August 18, 2026
Australia’s One Nation party has proposed a major reduction in tobacco excise, arguing that lower legal cigarette prices could narrow the gap with illicit tobacco and reduce the appeal of black-market supply networks.
According to ABC News on Aug. 18, One Nation leader Pauline Hanson proposed cutting Australia’s tobacco excise by about 75%. The party argues that years of rising tobacco taxes have pushed legal cigarette prices higher and created more opportunities for illicit tobacco operators.
The proposal remains a party policy position and has not been adopted by the Australian federal government.
One Nation Argues Lower Taxes Could Undercut Black Market
One Nation’s central argument is that high tobacco taxes have increased the price difference between legal cigarettes and illicit tobacco, encouraging some consumers to turn to cheaper illegal sources.
The party argues that reducing legal cigarette prices could bring some consumers back into regulated channels, weaken illicit demand and reduce profits for criminal groups.
News24 reported that One Nation wants to use lower excise rates to restore competitiveness between legal tobacco products and illicit markets.
The proposal’s fiscal impact, tax structure and long-term effect on tobacco consumption have not been formally assessed by the Australian government.
Proposal Comes as Australia Expands Illicit Tobacco Enforcement
The tax-cut proposal comes as Australia continues strengthening enforcement against illicit tobacco and vape supply chains.
In recent years, the Australian Border Force, Australian Federal Police and state agencies have expanded operations targeting illegal imports, storage facilities, logistics networks, distribution channels and retail outlets.
Recent enforcement actions have shown authorities moving beyond product seizures toward investigations into criminal networks and their operating structures, including alleged use of logistics systems, commercial facilities and retail channels.
One Nation’s proposal therefore presents a different policy approach:
● Enforcement agencies are focusing on disrupting illicit supply chains;
● One Nation argues lower legal prices could reduce the economic incentive for illicit trade.
The debate places tobacco taxation at the centre of Australia’s broader discussion over how to address illegal markets.
Supporters Cite Black-Market Pressure, Critics Warn of Health Risks
Supporters of tobacco tax reductions argue that excessive taxation can create unintended consequences.
They say that when legal tobacco becomes significantly more expensive than illicit products, consumers may shift toward unregulated sources, reducing government revenue and strengthening criminal markets.
One Nation argues that lower legal prices could help recover market share for legitimate retailers while reducing opportunities for illicit operators.
Public-health groups, however, have traditionally opposed tobacco tax reductions.
Critics argue that higher tobacco prices are an important tool for reducing smoking rates and that cheaper cigarettes could increase affordability, particularly among younger and lower-income consumers.
The debate therefore extends beyond tax revenue and focuses on the balance between public health, government income and illicit-market control.
Tobacco Tax Policy Faces New Political Debate
Australia has maintained relatively high tobacco taxes for years and has used price measures as part of its broader tobacco-control strategy.
At the same time, growth in illicit tobacco has become a major policy challenge.
Supporters of reform argue that the current approach should be reconsidered because high taxes may contribute to legal-market decline and illicit-market expansion.
Opponents argue that the solution lies in stronger enforcement, border controls and supply-chain oversight rather than lower tobacco prices.
One Nation’s proposal has not gained support from Australia’s major political parties and has not entered the formal legislative process.
As Australia continues efforts to disrupt illicit tobacco markets, the question of how tobacco taxes should balance public-health goals, legal-market access and black-market pressure is likely to remain a contested policy issue.
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Cover Image source: ABC News｜AAP
