Illegal tobacco trade costs Australia nearly $7 billion

The Australian government expects to lose nearly $7 billion in tobacco tax revenue due to a rise in illegal cigarette sales. Many Australians are switching to cheaper, illegal tobacco or using vapes, leading to a significant drop in expected tax income. The Treasury has revised its forecasts dramatically, predicting that the government will collect just over $7 billion from tobacco taxes for the 2025-26 financial year, down from an earlier estimate of $11.5 billion. The increase in tobacco excise, which amounts to about $35 for a pack of 25 cigarettes, has made illegal options more attractive. This means the government misses out on important tax revenue. Treasurer Jim Chalmers acknowledged the issue, saying that while more people quitting smoking is positive, the rise of illegal tobacco is concerning. To combat this trend, the government is increasing its enforcement efforts. The budget includes hundreds of millions of dollars aimed at reducing the flow of illegal cigarettes. This includes $157 million for customs and police, nearly $50 million for the Australian Federal Police to target organized crime, and $40 million for state governments. There is also funding for new methods to detect illegal tobacco at the border. Officials are aware that without additional enforcement resources, the financial impact would be worse. The government is committed to addressing this growing problem to protect their tax revenues.