Some Sense at Last? Coalition Proposes 80% Tobacco Tax Cut and Legal Vapes to Break Australia’s Black Market

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Coalition Proposes 80% Tobacco Tax Cut and Legal...

In line with what tobacco harm reduction experts have been suggesting all along, Australia’s opposition party wants to slash tobacco taxes and legalise regulated vapes and nicotine pouches to undermine the country’s booming black market.

Australia’s escalating illicit tobacco crisis has pushed a once politically unthinkable notion into mainstream debate: what if extremely high cigarette taxes and restrictions on safer nicotine alternatives are now strengthening the black market they were supposed to suppress?

The federal Coalition has (finally) proposed an extraordinary overhaul of Australian nicotine policy, combining an 80% reduction in tobacco excise with legal adult retail sales of regulated vaping products and nicotine pouches.

The plan would also inject $200 million into enforcement against criminal tobacco networks.

The proposal follows One Nation’s separate call for a 75% excise reduction after it has been made clear that Australia has reached a point where making legal cigarettes ever more expensive is encouraging substitution towards illicit cigarettes rather than quitting.

The ABS estimated that illicit sources accounted for around 80% of complete nicotine consumption in 2025, including illicit tobacco and different nicotine products.

The ABS estimated that illicit sources accounted for around 80% of total nicotine consumption in 2025, including illicit tobacco and additional nicotine products.

It also estimated that complete tobacco consumption has recently increased as growth in illicit tobacco more than offset falling legal sales.

Excise on a 20-pack would fall from approximately $30 to $6, narrowing the gap between regulated and illicit cigarettes.

Critics, including public-health researchers and Cancer Council Australia, counter that cheaper legal cigarettes could increase smoking and that illicit suppliers could simply lower their prices further.

From a tobacco harm reduction perspective, however, the most significant section of the Coalition proposal may not be the cigarette tax cut.

Australia currently permits grown-up vaping products primarily through pharmacies , while cigarettes stay readily available from conventional retailers.

The Coalition would reverse this regulatory imbalance by allowing regulated nicotine vapes and pouches to be sold to adults outside pharmacies, while retaining age restrictions.

Vapes would attract an excise of A$0.50 per millilitre of e-liquid, while nicotine pouches would be taxed at 2.5 cents per milligram of nicotine.

This matters because cigarettes, vapes and nicotine pouches do not present equivalent risks.

Cigarettes burn tobacco, generating the toxic smoke responsible for the overwhelming majority of smoking-related disease, whereas combustion-less vapes and pouches eliminate this.

How are safer alternatives penalised and cigarettes given a free pass?

Writing in the Washington Examiner , UK THR expert Martin Cullip, recently warned that a lawsuit challenging the US FDA’s enforcement discretion towards certain vaping products and nicotine pouches could ultimately make it harder for smokers to access lower-risk alternatives to cigarettes.

Cullip, however, highlights what he considers a fundamental regulatory contradiction: while campaigners seek the removal of unauthorised vapes and nicotine pouches because they “could” be harmful, combustible cigarettes (which we know with 100% certainty are deadly) remain widely available.

Back in Australia, the Coalition’s proposed 80% excise cut is radical and carries genuine risks.

Restricting legal vaping does not eliminate demand for vaping.

Australia does not need to choose between tobacco control and tobacco harm reduction.

It could preserve strong disincentives against smoking, aggressively pursue criminal suppliers and simultaneously make regulated vapes and nicotine pouches easier and cheaper for grown-up smokers to access.

The guiding principle should be simple: the safest option is not smoking or using nicotine at all, but for adults who continue to smoke, the safer legal alternative should also be the easier one to choose.

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