Coalition Proposes 80% Tobacco Tax Cut to Fight Gangs

Liberal Leader Angus Taylor and Nationals leader Matthew Canavan announced a policy to slash the tobacco excise by 80%, which would reduce the cost of a standard 20-pack of cigarettes from approximately $30 to $6. The proposal aims to dismantle the business model of organized crime gangs that profit from a surging illicit tobacco market, which the Australian Bureau of Statistics reported accounted for 80% of tobacco consumed in 2025.

The plan follows a wave of gang violence in Victoria, including over 150 tobacco store firebombings and six homicides since March 2023. In addition to the tax cuts, the Coalition proposes legalizing, regulating, and taxing vapes and nicotine pouches for adults. The package includes $200 million for a nationwide law enforcement surge targeting supply chains and $60 million for public health campaigns. Parliamentary Budget Office modelling suggests the shift back to the legal market could improve the budget balance by $8 billion over four years.

The Albanese government and Minister Tanya Plibersek rejected the policy, calling it a race to the bottom that would increase smoking rates. The Australian Medical Association warned that lower prices would undermine public health progress and widen health inequities among youth and disadvantaged groups. Conversely, some economists argue the move is a necessary step to eliminate the price advantage currently held by criminal networks.