Australia's black market for cigarettes is rapidly growing

Cigarette sales in Australia have dropped significantly, but this decline isn't as positive as it seems. The black market for tobacco is growing, causing issues for the country. Since 2010, when former Prime Minister Kevin Rudd raised tobacco taxes, smoking rates have decreased. However, this has led many smokers to buy cigarettes illegally. The rise in violence between gangs over the illegal tobacco trade is a troubling outcome of high taxes. Senior economics correspondent Shane Wright discussed these issues in The Morning Edition podcast. He noted that while Australia enjoys some of the lowest smoking rates in the developed world, the full impact of tax increases is hard to measure. Wright explained that various factors, like cigarette advertising bans and increased health awareness, all contributed to the decline in smoking. However, despite an apparent drop in tobacco use, the government's revenue from tobacco taxes is suffering. The recent federal budget projections show a significant shortfall. The government expected to collect $8.9 billion from tobacco excise but has had to adjust this estimate down by 25%. This indicates that many smokers are turning to the black market, undermining official revenue.