🚬 WHEN TAX CREATES A BLACK MARKET

Raise the Age, Not the Tax: Australia's Very Expensive War on Cigarettes

Australia has spent years trying to solve smoking with one extraordinarily sophisticated economic strategy:

💰 TAX IT.

Smoking still exists?

💰 Tax it again.

People are buying illegal cigarettes?

💰 Apparently we'd better tax the legal ones again.

Criminal syndicates are making fortunes selling illicit tobacco?

🚔 SEND IN THE POLICE!

At some point somebody needs to walk into Canberra, gently remove the calculator from Treasury's hands and ask:

"Guys… have we considered that the price might now be part of the problem?"

Because Australia's tobacco policy increasingly resembles trying to put out a kitchen fire by making the legal fire extinguisher cost $50 while somebody outside sells an unregulated one for $10.

🔥 Brilliant.

---

💸 FROM THE MILK BAR TO THE BLACK MARKET

Think back to Australia around 2010.

You walked into a milk bar, supermarket or service station.

"Winfield Blue, thanks."

You paid your money.

You received your cigarettes.

Nobody whispered a password.

Nobody took you through a mysterious door.

Nobody asked whether you were wearing a wire.

You weren't accidentally financing organised crime because you wanted a cigarette with your coffee.

It was a boring retail transaction.

And boring is actually quite underrated.

Fast-forward to 2026.

A legal packet of 20 cigarettes typically costs more than $40, while illicit packets can reportedly sell for as little as $10.

So we've created this magnificent consumer proposition:

🏪 LEGAL SHOP: $40+

🥷 ILLEGAL MARKET: potentially $10

Government:

"Why on Earth are people buying illegal cigarettes?"

Gee.

Get Sherlock Holmes on the phone.

We've got a mystery.

---

🧮 THE GOVERNMENT'S AMAZING CIGARETTE CALCULATOR

The original logic behind tobacco excise wasn't stupid.

Higher prices discourage smoking.

That's supported by decades of public-health research.

But policies aren't sacred commandments carved into Parliament House.

They should be reviewed when circumstances change.

Because eventually:

Higher tax → higher legal price → greater incentive to quit.

can start becoming:

Higher tax → enormous legal price → illegal tobacco becomes ridiculously attractive → criminal market grows.

And Australia's own Parliamentary Library says tobacco excise increases twice annually.

Meanwhile, Parliament's analysis of the illicit tobacco problem says Australia potentially lost somewhere between $7.7 billion and $11.8 billion in government revenue in 2024–25 because of the growing illicit market.

So congratulations.

🎉

We've potentially reached the point where cigarettes are so heavily taxed that enormous amounts of the tobacco tax aren't being collected…in

because people are buying cigarettes that aren't taxed.

That's almost performance art.

---

🚨 THEN ORGANISED CRIME DISCOVERED CAPITALISM

Here's the part that isn't particularly funny.

When you create an enormous difference between the legal and illegal price of an addictive product, somebody is going to discover that difference represents profit.

And organised crime isn't renowned for saying:

"No thank you. That business opportunity appears ethically questionable."

Australia's illicit tobacco problem has consequently become connected with serious organised crime and highly visible violence.

So now Australia needs stronger policing, intelligence operations, criminal penalties and enforcement.

Let's examine the journey:

💰 Raise tobacco taxes.

⬇️

💵 Legal cigarettes become extraordinarily expensive.

⬇️

🚬 Illegal cigarettes become financially attractive.

⬇️

💰 Criminal market expands.

⬇️

🔥 Violence follows parts of that market.

⬇️

🚔 Government spends more resources fighting illicit tobacco.

At some point the taxpayer is entitled to ask:

"Are we fighting the black market, or accidentally feeding the bloody thing?"

---

🚬 AND THE LEGAL CIGARETTE ITSELF HAS CHANGED

There's another strange element.

A Winfield bought in 2010 shouldn't automatically be assumed to be precisely the same consumer product as something carrying that brand today.

Australia introduced significant tobacco-product changes in 2025.

Products can now:

🚬 taste different;

🚬 feel different;

🚬 have different permitted ingredients;

🚬 use standardised dimensions;

🚬 have different filters;

🚬 have restricted variant names;

🚬 come only in specified packet sizes;

🚬 and contain different warnings and markings.

So the government itself acknowledges that today's tobacco products can look, taste and feel different from what consumers previously bought.

That doesn't mean somebody in Canberra has a laboratory marked:

☠️ DEPARTMENT OF MAKING WINNIES WORSE

Cigarettes were harmful in 2010.

They're harmful today.

Let's not rewrite history and pretend Grandpa's Winnie Blues contained organic kale and vitamin C.

😂

But consumers are entitled to understand that regulation has materially changed the product sold under familiar branding.

---

🎂 HERE'S ANOTHER IDEA: RAISE THE AGE, NOT THE TAX

Now here's my alternative.

If Australia's genuine long-term objective is to phase cigarettes out, stop trying to financially beat existing adult smokers into submission.

Instead:

Increase the legal tobacco purchasing age by one year, every year.

Imagine Australia nominated a cutoff generation.

People already legally entitled to purchase tobacco remain legally entitled to do so.

But younger generations never become legally eligible.

For example, instead of:

18+ can buy cigarettes forever

the eligibility rule effectively becomes tied to a birth year.

Every year the minimum age rises.

18. 

Then 19.

Then 20.

Then 21.

Then 22.

And so on.

Eventually you'd have:

👴 Existing adult smokers — still legally able to purchase regulated tobacco.

👨 Middle generations — progressively shrinking market.

👦 Younger generations — never legally enter the commercial cigarette market.

That means the tobacco market doesn't get smashed overnight.

It ages out.

Slowly.

Predictably.

Deliberately.

No overnight prohibition.

No pretending millions of nicotine-dependent adults suddenly disappeared because Parliament passed a bill.

No endless financial punishment.

Just a generational sunset.

🌅🚬

And this isn't some idea invented after three beers behind a pub.

The Australian Parliamentary Library has actually identified prohibiting tobacco sales to people born after a specified year — creating "tobacco-free generations" — as one possible endgame policy available to governments.

So let's have the conversation.

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📅 A 20–30 YEAR TACTICAL WITHDRAWAL

Think about how elegantly that could work.

Instead of announcing:

🚨 "CIGARETTES BANNED TOMORROW!"

—which would probably make the black market throw a Christmas party—

Australia announces a long-term timetable.

Phase 1 — Freeze the Tax Escalation

Stop endlessly making the legal product more expensive while investigating how much the price gap is contributing to illicit purchasing.

Phase 2 — Introduce the Tobacco-Free Generation

Choose the appropriate birth-year threshold following proper legal, health and economic analysis.

Existing legal adult consumers aren't suddenly criminalised.

But the pool of people legally eligible to purchase tobacco stops regenerating.

Phase 3 — Hammer the Criminal Supply Chain

Focus policing on:

🚔 organised importation;

🚔 commercial-scale illegal manufacturing;

🚔 organised criminal distribution;

🚔 money laundering;

🚔 violence and extortion;

rather than pretending some 55-year-old bloke buying a packet of cigarettes is Pablo Escobar.

Phase 4 — Make Quitting Easier

Put serious resources into:

🏥 cessation treatment;

🧠 addiction support;

💊 evidence-based nicotine replacement;

📚 education;

🤝 accessible healthcare.

Phase 5 — Let Cigarettes Retire

Every year, the lawful consumer population gets older.

The market gets smaller.

Eventually tobacco becomes something Australia aged out of, rather than something we taxed into an underground economy.

That's what I'd call a tactical withdrawal.

Not:

🚬 WAR ON SMOKERS.

But:

☮️ MANAGED RETIREMENT OF CIGARETTES.

---

💰 BUT THEN THERE'S THE AWKWARD QUESTION…

And here's where my suspicious little eyebrow goes up.

🤨

If government genuinely wants cigarette sales eventually reduced to zero…

what happens to all that tobacco-tax revenue?

That's a fair question.

I'm not saying governments secretly sit around Parliament House going:

"For God's sake, don't let Kyle quit — we've already budgeted for his Winnie Blues."

😂

But let's acknowledge the elephant coughing in the room.

Governments receive enormous revenue from tobacco taxation.

So if cigarette consumption genuinely approaches zero:

🚬 Cigarette sales disappear.

⬇️

💰 Tobacco excise disappears.

⬇️

🏛️ Government has to replace that revenue, reduce expenditure or restructure the budget.

And THAT creates a fascinating policy tension.

Government simultaneously has:

a public-health interest in collecting $0 tobacco excise because nobody smokes

and

a fiscal interest in receiving revenue while tobacco remains legally sold.

Those interests aren't necessarily evidence of corruption.

But pretending the tension doesn't exist would be ridiculous.

---

🤔 IF CIGARETTES ARE THAT BAD… WHY ARE WE STILL SELLING THEM?

This is the question I keep coming back to.

Government tells Australians:

☠️ Smoking kills.

🏥 Smoking causes enormous health costs.

🚭 Don't start.

🚭 Please quit.

🚭 Cigarettes should become increasingly undesirable.

Okay.

Fair enough.

Then somebody asks:

"So why don't we eventually stop selling them?"

Government:

👀

"Well…"

And that's where the conversation gets interesting.

Because outright prohibition has enormous practical problems.

You could create an even bigger black market overnight.

Existing smokers don't magically stop being nicotine dependent.

Criminal organisations would happily volunteer to become Australia's new tobacconists.

So immediate prohibition would be incredibly risky.

But that's precisely why the generational model deserves discussion.

Don't cancel tobacco tomorrow.

Cancel its future customer base.

---

😂 THE CURRENT MODEL IS STARTING TO LOOK LIKE THIS

Government:

"Smoking is terrible."

Smoker:

"Okay."

Government:

"We want you to stop."

Smoker:

"Okay."

Government:

"So we've made your cigarettes $50."

Smoker:

"There's a bloke selling them for $10."

Government:

"THAT'S ILLEGAL!"

Smoker:

"Then make the legal ones reasonably competitive."

Government:

"ABSOLUTELY NOT."

Smoker:

"Then phase cigarettes out."

Government:

"Whoa, whoa, whoa. Let's not do anything drastic."

😂🚬💰

You can understand why people start asking questions.

---

⚖️ STOP PUNISHING YESTERDAY. START DESIGNING TOMORROW.

This is ultimately what tobacco reform should become.

People who started smoking decades ago shouldn't be treated as an endlessly renewable source of taxation.

And young Australians shouldn't be recruited as the next generation required to keep the tobacco market alive.

So change the strategy.

Don't keep raising the price.

Raise the age.

Every year.

Let the legal market shrink naturally.

Keep existing adult smokers inside a regulated supply chain.

Make quitting accessible.

Attack organised criminal suppliers.

Prevent another generation from entering the cigarette market.

And build the budget so government doesn't depend upon tobacco revenue continuing forever.

Because there's something fundamentally contradictory about constructing a public-health strategy whose ultimate success means destroying one of its own revenue streams.

Maybe Australia should actually plan for that success.

---

🚬 THE LAST PACKET

Imagine the objective wasn't another tax rise.

Imagine Australia had an actual finishing line.

Not next year.

Not even necessarily next decade.

But one day, decades from now, somebody legally buys one of Australia's final packets of cigarettes.

Not because police finally won a war.

Not because cigarettes reached $247.95 a packet and came with a complimentary mortgage application.

😂

But because Australia deliberately stopped creating new generations of customers.

The old market gradually disappeared.

The black market lost the massive price distortion helping make it attractive.

Government had decades to transition away from tobacco revenue.

Public health had decades to support smokers.

Police could concentrate on serious organised crime.

And young Australians grew up knowing cigarettes simply weren't part of their generation's legal consumer market.

That's not prohibition with a sledgehammer.

That's a sunset.

🌅

Raise the age.

Stop endlessly raising the tax.

Support the people already smoking.

Stop creating future customers.

And if the government's ultimate objective really is a smoke-free Australia, start designing a budget that doesn't need smokers to keep paying into it.

Because eventually we have to decide what success actually looks like.

Is it the world's most expensive packet of cigarettes?

💰🚬

Or is it reaching the point where there is finally nobody left who needs to buy one?

☮️

#TobaccoReform #TobaccoTax #IllicitTobacco #BlackMarket #OrganisedCrime #PublicHealth #TobaccoFreeGeneration #Australia #PolicyReform