The black market for tobacco has flourished in the shadow of Australia’s aggressive tax policy, creating a lucrative opportunity for organised crime. As legal tobacco prices have soared, criminal networks have profited by undercutting legal products, offering smokers a cheaper alternative that circumvents regulation and taxation. This underground economy has expanded dramatically in recent years, fuelling criminal turf wars and undercutting tax revenues.
The sporadic but aggressive increases in tobacco excise are the primary driver of the illicit trade. Australia’s policy, implemented with the dual aim of reducing smoking rates and boosting government coffers, has created some of the world’s highest cigarette prices. Despite mounting evidence of unintended consequences, and prior knowledge of these risks, government officials remain inflexible, rejecting even temporary pauses in tax hikes.
