The Australian Association of Convenience Stores (AACS) has called on the Prime Minister to urgently review tobacco excise settings following reporting in The Age and The Sydney Morning Herald on the Oxford Economics report – Addressing Australia’s Illicit Tobacco market.
AACS CEO Theo Foukkare said the report reinforced warnings that current policy settings were driving a rapid shift away from the legal tobacco market and towards illegal supply controlled by organised crime.
“The modelling confirms what retailers are seeing on the ground - the legal market is being replaced by an illegal one,” Mr Foukkare said.
“Going by this report, if the current trajectory continues, Australia risks losing its legal tobacco market entirely by 2029.”
Mr Foukkare said the Oxford Economics analysis showed federal tobacco excise revenue had already fallen significantly - from $16.3 billion in 2019-20 to a forecast $5.5 billion in 2025-26 - and could fall to around $1.5 billion by 2028-29 if current trends continued.
Over the past decade, Australia has been approximately $67 billion short of forecast tobacco excise collections.
“If the legal market disappears, the tax revenue disappears with it - but demand doesn’t disappear. It simply shifts into the hands of criminal networks,” Mr Foukkare said.
Mr Foukkare said enforcement remained critical but could not succeed on its own while large price gaps between legal and illegal tobacco remained.
“You cannot enforce your way out of a market where illegal product is dramatically cheaper and widely available,” Mr Foukkare said.
“The Prime Minister needs to step in and have an honest conversation with his Health Minister Mark Butler and Treasurer Jim Chalmers about whether current excise settings are unintentionally driving the black market.”
“If we lose the legal retail channel, we lose control of tobacco control. Plain and simple.
“The PM has a choice - a regulated market that pays tax and follows the law, or a market 100 percent controlled by organised crime. If we don’t act soon, that choice will be made for us.”
Media contact: Theo Foukkare – 0423 003 133