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Tag: illicit tobacco

  • Economist Puts Australia’s Illicit Tobacco Crisis Squarely on Tax Rate

    Economist Puts Australia’s Illicit Tobacco Crisis Squarely on Tax Rate

    Australia’s illicit tobacco market has gone over the “Laffer Curve,” where excessive taxation leads to lower overall revenue, according to numerous experts, including U.S. economist Dr. Arthur Laffer. “It’s not working at all. Your taxes are way too high,” he told 7.30 News. “Australia has raised its tax rates on tobacco so high that people have found illicit products.”

    According to internal industry data, illicit products now account for 64% of all tobacco and 82% of total nicotine consumed in Australia. The black market is valued at nearly $10 billion, coinciding with a sharp drop in federal tobacco excise revenue—from $16 billion in 2020 to $7.4 billion in 2025.

    The federal government, however, has rejected calls to lower tobacco taxes, arguing that high excise rates and plain packaging have been effective in cutting smoking rates to 10.5% in 2024, down from 25% in the 1990s.

    The term “Laffer Curve” was made famous 50 years ago after Laffer drew it on a napkin at a meeting with then Ford Administration officials Dick Cheney and Donald Rumsfeld. Laffer said the concept wasn’t new, dating back to 14th-century writings.  

  • Illegal Tobacco Stressing Australian Emergency Responders

    Illegal Tobacco Stressing Australian Emergency Responders

    As illegal tobacco sales continue to increase across Australia, so too are violent crimes as organized syndicates get more brazen in their push for market share. There have been more than 100 fire bombings in Victoria in the last two years, with similar tactics being used in New South Wales and now spreading to Queensland.

    The Australian Medical Association Queensland warns that in addition to the obvious dangers of the fire bombings, the increase in violent attacks on tobacconists is also putting further pressure on overworked emergency departments, including police, fire, paramedics, and hospitals.

    “We are also concerned that a growing black market could see increased violence leading to avoidable emergency department presentations and pressure on our doctors and nurses,” said Nick Yim, president of the medical association.

    Queensland is attempting to battle the illicit market with more regulation, increasing fines tenfold. Individuals selling illegal products can now be fined A$32,260 ($20,646) while corporations can be fined A$161,300 ($103,232). Authorities now also have the option to close offending businesses for up to six months.

    The federal government announced in March it would pump A$157 million ($100 million) into federal health, crime, and tax agencies across two years to strengthen enforcement and target crime gangs.

    “This is a national issue that requires a national response, which is why the Albanese Labor government’s $156.7 million investment to tackle the tobacco black market is so critical,” said Mark Bailey, a spokesman for Shadow Health.