Coalition plans to cut tobacco excise by 80 per cent, legalise vapes

The Coalition is “confident” its plan to legalise vapes and slash the slash the tobacco excise will crack down on organised crime despite fears the move could undo years of public health efforts.

The proposed plan would reduce the excise in a standard 20-pack from about $30 to just over $6, cutting the tobacco tax by 80 per cent. The move would be subject to review after two years.

The Coalition has sought costings from the Parliamentary Budget Office in which it claims the the department has deemed the excise cut “sufficient to bring prices in the legal and illicit markets into alignment, making it difficult for the illicit market to compete”.

This would be accompanied by a $200m investment in nationwide law enforcement to bolster “more raids, arrests, seizures, and investigations to shut illegal shops, intercept illegal tobacco at the border”.

The plan would also legalise, regulate, and tax vapes and nicotine pouches while introducing a $60m national public awareness campaign on the organised crime links to illegal tobacco.

Opposition Leader Angus Taylor argued the existing excise policy had failed and pushed Australians away from legal tobacco.

“You can go to any part of Australia and get smokes for $15 a pack or less. This is not good, but the horse has bolted, and what we’ve seen is the current policy has failed,” Mr Taylor told Channel 7.

“It’s supporting rising crime, cheap smokes, and frankly, it is supporting organised crime in this country on a scale that we should be deeply concerned about.

Mr Taylor insisted the 80 per cent figure would “smash the business model of criminal gangs supporting illegal tobacco”.

“We’ve been working closely with the Parliamentary Budget Office. We know that is the point at which that business model simply doesn’t work anymore,” he said.

A 2024-25 report by the Illicit Tobacco and E‑cigarette Commissioner valued the illicit tobacco market in Australia at an estimated $5.6bn.

The report found the amount of evaded excise revenue was between $7.7bn to $11.8bn compared with $7.7bn excise paid on legal tobacco imports.

Originally published as Coalition plans to cut tobacco excise by 80 per cent, legalise vapes