One Nation wants to cut the tobacco tax. Would that curb the illicit cigarette market?

Alexas Fotos/Pexels One Nation leader Pauline Hanson has called for a 75% cut to the tobacco tax and a freeze on any price indexation of the tax for three years.

Hanson said this would make cigarettes cheaper and so undercut Australia’s growing illicit tobacco market.

One Nation argues this would bring a packet of cigarettes currently selling for about A$46.50 down to roughly $21 or $22.

That’s if the tax cut is passed on in full to consumers.

That “if” matters.

Tobacco companies, not governments, set the retail price of cigarettes.

There is no legal mechanism to force tobacco companies to pass a tax cut on to people who smoke.

A large tax cut could be an immediate cash windfall for companies that manufacture a product killing about 24,000 Australians each year , while doing very little to dismantle illicit supply networks.

Earlier today, Health Minister Mark Butler said of One Nation’s proposal, “Governments aren’t usually in the habit of engaging in price competition with organised crimes.” Is this new? One Nation’s proposal is not entirely new.

Hanson floated a 50% tobacco tax cut earlier this year ahead of her National Press Club address .

The federal Coalition and shadow cabinet are reportedly considering recommending an 80% reduction in tobacco tax .

The Tasmanian Liberal government has also publicly called for the Albanese government to lower tobacco taxes – but has not specified by how much.

NSW Labor Premier Chris Minns has openly voiced his support to review and cut the tobacco tax.

This is a break from the federal Labor position to focus on strengthened and coordinated enforcement activities to curb the illicit market.