How $40-a-pack cigarettes pushed Australians to the black market
Headlights shined from the far end of the garage in a middle-class beachside neighborhood in suburban Melbourne, Australia. He walked up to an unmarked van and soon emerged above ground with the illegal goods.
A carton of cigarettes.
Australia has the most expensive cigarettes in the world; The average price of a pack of mid-range cigarettes is 55 Australian dollars (almost 40 dollars), almost double the price in New York City. A series of steep tax increases, eight in 10 years, were introduced to curb the declining smoking rate. But high prices have also led to a thriving black market estimated to be a multibillion-dollar industry that accounts for half of all tobacco sales in the country.
“It’s the injustice of the situation,” said Pat Felvus, a 75-year-old retired teacher, who described in an interview his first experiences buying illegal cigarettes that cost as little as AU$10 a pack. “Why would you pay four times that amount?”
Illegal cigarettes can be easily found on every high street in Australia, in markets, confectioners and tobacconists. At a time when basic food prices are increasing, competition has caused under-the-counter cigarette prices to gradually decline. Violence broke out, with scores of firebombings, muggings, shootings and murders among organized crime groups jostling for a slice of the lucrative market.
The extent of the black market and criminality has raised questions about how much governments can increase so-called sin taxes to curb undesirable behavior. Australia currently faces a dilemma: Are high cigarette prices doing more harm than good? Australia faces an illicit tobacco “crisis”, the government has said. But despite losing billions of dollars in tax revenue, he has refused to back down on tax increases or acknowledge the role of tax revenues in fueling illegal trade. The World Health Organization recommends that taxation is “the most cost-effective way to reduce tobacco use.”
Australian authorities are instead pouring resources into toughening laws and enforcement efforts; critics say this is a Mole-Ne Approach that does not address the underlying profit motive driving the problem.
“What we did resulted in a fake Prohibition,” said former federal police detective Rohan Pike, who led the Australian Border Force’s special tobacco unit. “This has created a market for organized crime.”
Until a few years ago Felvus was paying full price, around AU$50 per pack. She has been smoking light cigarettes since the age of 19, except when she was pregnant with her daughter. (She lit up in her hospital bed after giving birth, this was 1978.)
“You’re crazy to buy these from traditional stores,” he recalled a fellow smoker telling him.
He entered a shop in the neighborhood with a tobacco sign in its window and asked for cheap cigarettes. “I felt like someone was going to touch my shoulder or something,” he recalled. “I felt a little naughty.”
But the man behind the counter showed him a variety of contraband cigarettes and bought him cigarettes for about $14 per pack. A few months later, the store’s windows were broken. He said he met the shop owner twice in a parking lot to buy his cigarettes, while a stall was set up in front of another store down the street.
Most illicit cigarettes in Australia are smuggled in from around the world, such as the Middle East or China, at much lower prices. Manchester cigarettes, reportedly produced in the United Arab Emirates, and Double Happiness, a Chinese brand, have become the choice of many people.
The broken window of Felvus’s local shop may have been part of the so-called “tobacco wars” violence between criminal gangs competing for market share. Police said there were at least 100 incidents of firebombing related to turf wars between organized groups concentrated in Melbourne, Australia’s second-largest city. One group recorded more than 250 attacks.
In January 2025, a 27-year-old woman was killed in an arson attack on a home that police said was caused by attackers linked to the tobacco case who targeted the wrong address.
“It used to be just a health problem, now it’s become a crime problem,” said James Martin, a criminologist and professor at Deakin University. “We are opening this huge new front in the war on drugs.”
Shopkeepers are forced to sell smuggled cigarettes or surrender their stores to be run by criminal gangs, according to authorities and news reports. In a video released by police, a man can be heard threatening the cashier into handing over the keys.
“I’ll be back in 24 hours, and if this store is still open, I’ll come down and burn it down,” the man says in the recording.
Jacqui McQueen, 44, a domestic violence support worker who lives in the working-class city of Geelong, west of Melbourne, said she could think of 20 shops in her immediate area where she could buy illegal cigarettes.
“People don’t blink anymore,” he said. “The government expected people to resign, but it didn’t work out that way.”
McQueen said she started smoking when she was 17, but quit a few years later after she became pregnant with twins and began raising her young children. When one of the twins was diagnosed with an aggressive cancer, he started smoking again to cope with the stress, and this cancer killed him at age 11.
McQueen recalled paying around AU$15 for a pack of 30 when he started smoking again around 2010. Prices seemed to skyrocket from there. He said the last time he bought a legal pack, the cost of 25 cigarettes was around A$62.
McQueen said he stuck with Winfield Optimum Crush Blues until a worker at a regular store offered a cheaper one. With her youngest son still living with her and her grandchildren with whom she often cooks, she said the cost savings have made a significant difference to her finances.
In September, Australia once again increased its tax on cigarettes, increasing the excise tax on each cigarette to around AU$1.50, three times the level of a decade ago.
Jake Goodrem, 34, a plumber, said he has largely quit smoking and now uses e-cigarettes occasionally, not because of increased cost but because of health concerns. He said he still occasionally buys packages on the black market for his partner.
He said he couldn’t imagine going back to paying full price for the legal kind.
“Even if I were a millionaire, I still wouldn’t do it,” he said. “You must be stupid.”
This article was first published in The New York Times.
