New data lights up enormity of tobacco black market
Four in five e-cigarettes and cigarettes consumed in Australia were purchased on the black market, according to new official estimates; this rate was 12 percent lower than a decade ago.
Data released by the Australian Bureau of Statistics on Wednesday painted a much more serious picture of the scale of the problem compared to the government’s hand-picked Illegal Tobacco and E-cigarette Commissioner.
Commissioner Amber Shuhyta estimated in her 2025 annual report that illicit tobacco accounts for 50-60 percent of the total market.
ABS said that between 2017 and 2025, the black market share of total nicotine consumption increased from 12 percent to 80 percent.
While the total amount of nicotine consumed increased by 40 percent, the population increased by only 14 percent over the same period.
Legal tobacco consumption has fallen to less than a third of its 2017 level.
Economists argue that successive governments’ decisions to increase tobacco taxes, which have risen by 112 percent between 2017 and 2025, have created a huge profit incentive for organized criminals to create a thriving black market.
Deputy Customs Minister Julian Hill said that although the ABS’s new data was experimental, its conclusions largely mirrored the illicit tobacco commission’s report.
The ABS used wastewater sampling to analyze the amounts of nicotine discharged through the sewage system and compared this with changes in over-the-counter sales from the supermarket scanner and tax data.
However, this method also involves the use of other products, such as nicotine pouches and smoking cessation aids such as patches and gum.
Mr Hill said increased enforcement measures before, at and after the border had an impact on the illegal tobacco trade.
“While the government has always recognized that the illicit trade can grow before it declines, there is very early evidence to suggest that in states with strong lockdown powers and landlord penalties, such as Queensland, nicotine users are returning to the legal market when poor quality illegal shops are forced to close,” he said in a statement.
More than 2.6 billion cigarettes were seized in the last financial year; There was a 320 percent increase compared to the number seized four years ago.
Estimates released in May’s federal budget revealed that the tobacco black market had wiped out $6 billion in tax revenues in the five months since the previous fiscal update in December.
The excise tax is projected to fall to just over $2 billion a year by 2030, after generating more than $16 billion in 2020.
Shadow treasurer Tim Wilson has previously said the government was repeating the mistakes of prohibition-era America.
“It basically drives legal citizens into illegal behavior,” he said in May.
“The big question for everyone is: What do you need to cut the excise duty and whether there is the political will to get people to pack up and move.”
Mr Hill accused the opposition of hypocrisy after they increased tobacco duty by 121 per cent during his time in office.
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