Experts back NSW Premier Chris Minns' plea for cigarette tax cut despite opposition

News.com.au

07-06-2025

NSW Premier Chris Minns says law-abiding citizens are being 'dragged into the black market' by the federal government's tobacco tax – and he wants that to change.
Mr Minns threw down the gauntlet this week when he called for a re-evaluation of the tobacco excise, kicking-off political rows in both Sydney and Canberra.
Twice yearly, the federal government sets the excise for tobacco products but in this year's budget recorded a $5.2bn decline in revenue since 2022-23.
The NSW Premier has pointed the finger at illicit sales at tobacconists, some 5000 of which have opened up across NSW over the past few years.
'There's a whole bunch of law-abiding people who wouldn't break the law in a million years,' Mr Minns said.
'But, they're being dragged into a black market where they go to the store and they can either buy a $17 packet of illegal cigarettes or a $60 packet of cigarettes.
'It's a no-brainer.'
Despite pushback, Mr Minns said every tax change started with 'an idea from someone who calls out a policy that's no longer fit for purpose'.
'So, let's get the ball rolling here because these illegal tobacco stores are pushing out hot bread shops, small businesses and restaurants.
'Because the sales from illegal tobacco are so lucrative, they can just pay the rent at a higher price.
'Something's gone amiss here and we need to have a crack at fixing it alongside our federal colleagues.'
Mr Minns earlier signalled that police resources may have to be moved from domestic violence and organised crime to combat illicit tobacco.
Mr Minns said the situation was 'intolerable', with 'every to-let shop in every high street in Sydney taken over by a tobacconist'.
'The biggest supporters of a massive excise on tobacco sales in NSW are probably organised criminals,' he said.
'It's a giant black market and major display on every street in every suburb in NSW.'
No easy answers
On Wednesday, federal Treasurer Jim Chalmers ruled out any change to the excise, saying making cigarettes cheaper wouldn't solve the issue of the booming illegal tobacco trade.
In NSW, there are about 19,500 tobacco stores across the state – up from 14,500 a few years earlier – that are overseen by only about 30 health inspectors.
A parliamentary inquiry into illicit tobacco sales, pushed for by the NSW opposition, will later this year examine which agency is best suited to the task.
Until now, Liberal leader Mark Speakman has remained mum on whether NSW Police should takeover illicit tobacco enforcement from NSW Health.
On Thursday, Mr Speakman said illicit tobacco had exploded under Mr Minns and organised criminal gangs were 'raking in big money'.
'They know NSW has minimal enforcement and some of the weakest penalties in the country,' Mr Speakman said.
'While other states have acted to drastically increase penalties and improve enforcement, Chris Minns has been missing in action.
'Now that the federal Treasurer has ruled out changes to the federal excise, Chris Minns needs to tell people how he is going to tackle this issue.'
Under law, an individual found to be selling a prohibited tobacco product faces a maximum fine of $55,000 for a first offence.
Those laws will change on July 1 when a new tobacco licensing scheme is introduced, requiring businesses to obtain a tobacco retailing licence.
Businesses found to be selling tobacco products without a licence will face fines of up to $220,000 and $44,000 for an individual.
Nonetheless, the issue sparked a fierce debate in NSW parliament on Wednesday between Mr Speakman and Police Minister Yasmin Catley.
Asked about whether anti-gang Taskforce Falcon will expand its remit to illicit tobacco, Ms Catley struck out.
'The leader of the opposition knows that it is Health that enforce illicit tobacco. He knows that,' she said.
'And, he has come in here and has the audacity to come in here and say the police are not doing their job. Well, shame on you. Shame on you.
'NSW Police are doing absolutely everything they can and I am disgusted that the leader of the opposition could come to the NSW parliament and suggest otherwise.'
For his part, NSW Health Minister Ryan Park has pointed the finger at the former Coalition government for not earlier introducing a licensing scheme.
What do the experts say?
Over the past six years, the duty price put on a 20-pack of cigarettes has gone up by about 75 per cent – from $16 to $28.
As a result, the price of a packet at the counter sits about $40-50, with the cheapest little more than $30.
Illicit cigarettes, meanwhile, cost about $13-15 per 20-pack and up to $20 for premium brands.
University of Sydney School of Public Health researcher Edward Jegasothy supported Mr Minns' comments on the tobacco excise.
He said there was no solution to the prevalence of illicit tobacco without a re-examination of the 'punitive' policy.
'There's really no ethical basis for the policy because it's essentially just a punitive policy attack on the poor,' he said.
Mr Jegasothy said the policy had failed to demonstrate any 'meaningful health benefits and certainly no equitable health benefits'.
'I can't see a solution that doesn't have involve bringing down the tax,' he said.
'It has to be part of the solution … because it is essentially putting more holes in the bottom of the boat.'
Mr Jegasothy said the belief that the excise, in increasing the cost of cigarettes, would reduce rates of smoking 'didn't hold water'.
With rates of smoking higher among poor and marginalised groups, he instead encouraged solutions that addressed the root causes, 'which is largely poverty'.
He urged for a review of the excise as a public health policy, including up until the explosion of black market sales in the early 2020s.
That explosion, Mr Jegasothy suggested, came as a result of a combination of factors, including the cumulative impact of the excise and a tightening on loose leaf tobacco.
The Australian Association of Convenience Stores has also backed Mr Minns' call for a rethink of the tobacco excise.
Chief executive Theo Foukkare said it was 'extraordinary that it's gotten to this point'.
'Tobacco is a price-sensitive consumer product,' he said.
'If you put a price on it that is manifestly higher than what people can afford, they'll find a cheaper alternative and that's where this incredibly dangerous black market is cashing in – and even worse, they're using that money to fund the most atrocious crimes.'
What about other states?
NSW is far from the only state or territory in Australia where the issue of illicit tobacco has become a hot-button topic in recent years.
In Victoria, police have continuingly battled the so-called tobacco wars, conflict between organised crime groups during which stores have been burned.
According to Victoria Police, there were about 1300 stand-alone tobacco stores in the state – of these, 1000 sell some kind of illicit tobacco.
From July 1, business caught possessing or selling an illicit tobacco product in Victoria face fines of up to $1.7m.
For an individual, that penalty is about $830,000 or 15 years in prison.
Further north, Queensland Health seized more than 15.2 million illicit cigarettes worth $12.2m across the state between July 1, 2024 and February 28, 2025.
Mr Jegasothy said outside of NSW and Victoria, there was little publicly available information about the prevalence of illicit tobacco.