What Happened
Pauline Hanson has re-entered the policy arena with a proposal that challenges decades of Australian tobacco taxation: a 75 per cent cut to excise duties. One Nation argues this move could lower the price of a legal packet from roughly $46.50 to between $21 and $22. The plan also includes a three-year freeze on indexation.
This stance comes after reports indicated that nicotine consumption in Australia rose by about 40 per cent between 2017 and 2025, even as the population grew by only around 14 per cent. The core of Hanson’s argument is not that smoking is safe, but that current tax levels may be fueling a lucrative black market for organised crime.
While governments have long used high prices to discourage smoking and raise revenue, recent data suggests the illicit sector has expanded significantly. Illegal tobacco and other black-market nicotine products now account for an enormous share of total consumption. At the same time, government tobacco excise revenue has fallen sharply.
The Timeline
The value of illicit tobacco attempting to enter the market has soared from $1.74 billion in 2018-19 to more than $6.4 billion in 2023-24, according to Australian Taxation Office estimates.
On Tuesday, 18 August 2026, Treasurer Jim Chalmers said the government was not considering a cut and its focus was on compliance. Hanson’s team pairs this tax cut with a call for stronger enforcement, tougher penalties, and measures targeting criminal assets.
The Legal and Constitutional Affairs References Committee is set to hand down its report into the illegal tobacco crisis on August 28.
Who Said What
“It is about restoring the rule of law and breaking the black market,” Hanson said. Ms Hanson also promised stronger border enforcement, faster shop closures, tougher penalties for traffickers and attack organisers, and aggressive seizure of criminal assets and unexplained wealth.
Laura Hunter, CEO of the Australian Council on Smoking and Health, told SBS News making cigarettes cheaper would have “huge ramifications for the health of Australians”. She noted that Australia now has the lowest smoking rates that we’ve ever recorded, and that’s the result of decades of policies that are designed to make cigarettes less affordable.
NSW Premier Chris Minns has publicly asked whether extremely high taxation is fueling the illicit market and called on the federal government to reconsider the issue. He suggests that maintaining current approaches while the illegal market expands may be an expensive policy choice.
The Numbers That Matter
The price gap is stark: legitimate retailers sell heavily taxed legal products, often nearing $50 per packet, while illegal operators can offer cigarettes for as little as $15 or $20. Smokers do not need to be economists to see the incentive to switch to the cheaper option.
A 75 per cent excise cut would be an enormous policy change requiring detailed economic and health modelling before any government adopted it. The government loses revenue, legitimate businesses lose customers, and organised crime gains money.
Why This Matters
One Nation believes the government has miscalculated by continuing to increase excise without addressing enforcement gaps. Victoria has already seen serious violence and firebombings linked to competition in the illicit tobacco market. Authorities have repeatedly connected these crimes to organised networks.
Legitimate businesses like convenience stores and tobacconists struggle to compete when they must sell taxed goods while illegal sellers undercut them dramatically. This pressure forces some smokers into an unregulated market where authorities have even less control over product safety.
Public-health advocates warn that making legal cigarettes significantly cheaper could undermine progress in reducing tobacco use. The Greens have attacked the proposal, arguing it could increase profits for multinational tobacco companies rather than solving the criminal problem.
What Happens Next
Labor does not necessarily need to adopt One Nation’s full 75 per cent reduction. The government could explore a smaller excise cut, a temporary freeze on increases, or dramatically increased border enforcement.
On Tuesday, 18 August 2026, Hanson said her party would also pause indexation on the excise for three years, saying the policy, if passed through in full, would reduce the price of a $46.50 legal packet of cigarettes to around $21 to $22.
Meanwhile, the Treasurer claims that new data shows the Liberals would have smashed through Australia’s debt ceiling and would be on track to exceed $1.2 trillion this financial year if they had won the last election.