No guarantee tobacco tax cut would lure Australian smokers from illegal trade and raise more revenue, report says

The collapse in Australian tobacco excise revenue in recent years has put further pressure on the budget position. Photograph: Liudmila Chernetska/Getty Images

Slashing the tobacco excise might not be enough to lure smokers back to legal cigarettes and could even widen the multibillion-dollar hole blown in the budget by the booming illicit trade, new research shows.

The analysis from the e61 Institute comes as Jim Chalmers revealed next week’s midyear fiscal update will reveal an extra $12.7bn in unanticipated spending, including an additional $6.3bn in higher than expected disaster relief payments.