Legal tobacco has gone from a dependable convenience category to a problem one, as years of excise rises pushed customers towards a booming illicit market. One Nation now wants to reverse that with a sharp cut to the tax.
What One Nation is proposing
Pauline Hanson used her National Press Club address to call for the tobacco excise to be cut by 50 per cent, with indexation frozen until 30 June 2028 and an option to review and extend. One Nation says that would take roughly 35 per cent off the retail price of legal tobacco, around $17 off a pack of 20. The argument is simple: tax has made legal cigarettes so expensive that smokers have moved to illegal product, and lower prices would pull them back.
The numbers behind the argument
The case rests on a collapse in excise receipts. One Nation points to tobacco excise revenue falling from about $16.3 billion in 2019-20 to a projected $3.6 billion in 2026-27, with a forecast of $2.1 billion by 2029-30. It puts the illicit market at around $5 billion. Whatever the precise figures, the direction is not in dispute: as the legal price rose, legal volume, and the revenue with it, went the other way.
Why it matters on the forecourt
For convenience operators, tobacco was long a high-turnover category that brought people through the door. Illicit tobacco, sold cheap from a minority of outlets, has stripped that trade from operators who do the right thing. A 50 per cent excise cut would narrow the gap between legal and illegal prices and give compliant retailers a chance to win customers back, not on a discount they fund themselves, but on a tax the government sets. It would also change the calculation for the customer who currently drives past a legal counter to buy under the table.
The other side, and the politics
Public health groups have warned that cheaper legal tobacco could lift consumption and hand a win to tobacco companies, and that enforcement, not price, is the right tool against the black market. The proposal is a minor-party position for now, though it has company: the Coalition has been reported as weighing a 50 per cent cut of its own. That makes it more than a fringe idea, but well short of settled policy.
What to watch
Two things will decide whether this reaches the forecourt: whether either major party adopts a cut as a budget or election commitment, and whether enforcement against illicit supply ramps up alongside any price move. For operators, the category will not recover on price alone while illegal product is still sold openly nearby. Watch the enforcement side as closely as the excise side.