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 idea 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.
High tobacco taxes have historically been among Australia’s most powerful smoking-control measures, otr at least that was the intention. But taxation relies partly on consumers responding to higher prices by smoking less or quitting. When cigarettes costing $40–$50 legally compete with black-market packs reportedly selling for $15–$20, another form of substitution becomes possible.
Recent experimental modelling by the Australian Bureau of Statistics illustrated the scale of the problem. The ABS estimated that illicit sources accounted for around 80% of total nicotine consumption in 2025, including illicit tobacco and other nicotine products. It also estimated that total tobacco consumption has recently increased as growth in illicit tobacco more than offset falling legal sales.
Meanwhile, organised crime has increasingly become entangled with tobacco distribution. The Coalition cites almost 200 tobacco-related arsons and six homicides in Victoria and estimates criminal groups are making between $4.1 billion and $6.9 billion from illicit tobacco. With this in mind, its answer is to attack both supply and profitability.
Excise on a 20-pack would fall from approximately $30 to $6, narrowing the gap between regulated and illicit cigarettes. At the same time, additional police, border, and financial-intelligence resources would target the remaining criminal networks. The tax level would be reviewed after two years.
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. That risk cannot be dismissed. But neither can the consequences of maintaining a tax structure while a substantial share of demand migrates beyond government control.
Proposing a radical nicotine reset
From a tobacco harm reduction perspective, however, the most significant part of the Coalition proposal may not be the cigarette tax cut. It is the proposal to make regulated smoke-free alternatives easier to obtain.
Australia currently permits adult vaping products primarily through pharmacies, while cigarettes remain 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.
More importantly, the evidence that vaping can help smokers quit continues to strengthen. The latest Cochrane living systematic review, with evidence current to January 2026, concludes that nicotine vapes help more people achieve long-term smoking abstinence than conventional nicotine replacement therapy. The evidence supporting this advantage over NRT is rated as high certainty.
How are safer alternatives penalised and cigarettes given a free pass?
Australia therefore faces an unusual policy contradiction: the most harmful nicotine product is readily available through ordinary retail channels, while accessing one of the best-supported smoking-cessation alternatives is considerably more restricted.
Sadly, however, such patterns are being observed worldwide. 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.
The lawsuit, brought by several public health organisations, challenges the FDA’s decision to temporarily allow some nicotine products to remain available while it reviews their marketing applications. The plaintiffs argue that unauthorised products pose risks to consumers. 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. Cullip notes that the FDA has authorised more than 1,000 cigarette products during the past five years, despite smoking causing almost 500,000 US deaths annually.
The safer choice should be the easier choice
Back in Australia, the Coalition’s proposed 80% excise cut is radical and carries genuine risks. The precise tax reduction needed to weaken illicit tobacco without stimulating cigarette consumption deserves careful modelling, not political certainty in either direction. But the proposal confirms a weakness in Australia’s current approach that is increasingly difficult to ignore.
Enforcement alone must compete against enormous criminal profit margins. Restricting legal vaping does not eliminate demand for vaping. And continually increasing cigarette taxes cannot deliver their intended public-health benefit if smokers increasingly respond by purchasing cheaper illegal cigarettes.
The more promising element of the proposed reforms is therefore creating a regulated market for lower-risk alternatives.
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 adult 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.