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At yesterday’s  Illicit Tobacco and E-Cigarette national symposium in Canberra, veteran illicit trade expert Ted Leggett from the UN’s Office of Drugs and Crime told the room in the final session that those at the peak of the global illicit tobacco trade can buy cigarette packs from manufacturers for just US42 cents. Many of these are sourced from Big Tobacco companies  which export in bulk to customers and then wash their hands of any knowledge or responsibility when these products end up in illicit trade.

In Australia, the retail carton price of an illegal untaxed pack is as low as $7 – over 1500%  more than they were first bought for by those at the apex of the trade. Of course, $7 provides cuts for the retailers, transportation from overseas, warehousing costs and distribution to the retailers.  So a single pack price of $10-$15 is common as all get their heads in the trough.

For the last few years, several Australian commentators on the dynamics of Australia’s in-your-face illicit tobacco retailing have been on repeat telling anyone commercially illiterate enough to listen that the way out of the problem needs to be led by a government volte face on tobacco tax. Deakin University criminologist James Martin has been a go-to person for those seduced by how obvious a solution lowering the tax must surely be.

In an earlier blog I listed some of Martin’s  public statements on just how low tax would need to fall. Last November he even suggested to the Singapore Straits Times that tobacco tax might need to be “even eliminated to discourage criminals from operating a black market”.  No country in the world has zero tobacco tax, so that’s quite an out there suggestion, to say the least.

Australia’s current tobacco tax since March 3 2026 has been $1.52829 per stick, or $30.57 per pack of 20.  Martin has suggested lowering the tax to the “sweet spot”  which applied in 2020, around the time that sales of  illicit cigarettes really began booming. In March 2020, excise was $0.94964 or $18.99 a pack.

So if the government was to heed Martin’s “eliminate” tax nostrum tomorrow, a typical budget brand costing $42 would cost $11.43 and if instead they dropped the tax to 2020 levels, the pack cost would be $23.

Given that current price competition for taxed budget band cigarettes is within a $2-3 range (check the price board in any supermarket), the price difference between Martin’s eliminated tax packs and the $7 for illicits you can pay if you buy by the carton, is already way over that, at $4.43. And the reduction to the 2020 sweet spot? A whopping $12 more than $7, a difference that of course would not make a blind bit of difference to the price attractiveness of illicits.

What started all this?

Under the Morrison government (Aug 2018 – May 2022) Health Minister Greg Hunt introduced a bill with two pillars: to make vapes available only through pharmacies, and to outlaw personal and commercial importation of vapes unless these were for the pharmacy trade. In June 2022,  28 Liberal/National backbenchers led by Matt Canavan signed a letter to Prime Minister Morrison which set in train the deliberate gutting of Hunt’s bill. Pharmacy access remained but the import ban lapsed after Morrison presumably caved. This rendered the pharmacy access component a dead duck: why go to a chemist when you could get vapes anywhere?

Vape shops then began mushrooming in plague proportions across the country, with state health authorities rarely raising a finger. With the COVID pandemic declared on March 11, 2020 COVID dominated public health priorities for several years. Understandably, the last thing state governments were going to do amid this crisis was to direct any serious action at illegal vape shops.

Across several years, flagrant illegal retailing with bold signs advertising availability consolidated across Australia. Criminals (by definition) who were supplying this illegal trade collectively thought “no one has done anything to stop us with vapes … so what are we waiting for? Let’s expand and sell illegal, untaxed cigarettes openly too.”

This was compounded by state governments having unfit for purpose legislation that prevented them issuing on-the-spot fines, seizing stock and closing illegal traders instead having to go through long drawn out and expensive legal action. Most states did not require tobacconists to be licensed, so there were no databases on retailers either.

All this has now changed radically as I detailed here. Queensland and Australia led the way with weapons-grade legislation, with NSW late to the party in 2025 with on-the-spot seizures, closures and eye-watering maximum fines for both individuals and corporations caught selling. Victoria and Western Australia have still to embed their legislation.

Immensely effective regulatory models have long existed in the pharmaceutical, alcohol and firearms retailing areas. Any enterprising criminal who set up high street shops selling prescribed drugs to walk-ins with no prescription, alcohol without a liquor license or firearms to unlicensed shooters would be hit with the proverbial tonne of legal and jail time bricks.

We are a way off emulating those best practices with tobacco sales. There was important discussion at the symposium about the bizarre anomaly that there are some 40,000 tobacco retailers serving less than 10% of the population who now smoke; while there are 7,000 petrol stations for 19 million licensed drivers  and  6,000 pharmacies serving well over 90% of the population want prescribed and other medicines.

Supermarkets have easily the most responsible tobacco sales record when it comes to not selling to  kids. The idea that cigarette sales might only occur there may well be in the wind.