The leader of Australia’s most populous state has called for a review of the “massive” federal excise on tobacco amid concerns of a growing black market.
Ahead of the NSW budget on June 24, Premier Chris Minns said a decision had to be made about resources devoted to combating illicit tobacco sales.
It could mean reallocating police away from domestic violence, youth crime and gang cases to regulate tobacco sales.
“We may need to do that because I’m concerned as a constituent and as a father to see the number of high street premises being taken over by tobacco firms,” he told reporters on Monday.
“But I wonder whether we need to roll this back a couple of steps and look more closely at the federal government’s massive excise on tobacco.”
The excise has driven down the number of smokers in NSW to about one in nine adults, the state’s most recent population health survey shows.
But the “massive increase” in excise had “exploded the illicit tobacco marketplace”, Mr Minns said.
“It’s meant that many people who wouldn’t go near an illegal behaviour ordinarily are buying illicit tobacco almost on a daily basis,” he said.
He called for the size of the excise and its influence on illicit tobacco sales to be investigated.
There are an estimated 19,000 tobacco retailers in NSW, with a paid licensing scheme and steeper fines for selling illegal cigarettes to take effect in July to curb black market trade.
Queensland police found a fake wall full of cash and a secret tobacco store on Thursday during a major crackdown on more than 20 illegal traders.
In Victoria, illegal tobacco sales have prompted regular violence, with more than 100 firebombings in two years.
The federal tobacco excise topped $1.40 per cigarette in March but the expected tax take has nosedived, with almost $7 billion wiped from projections in the federal budget.
Economist Chris Richardson called the excise increase without a commensurate enforcement scheme an “epic policy fail”.
Treasurer Jim Chalmers’ March budget revealed $6.9 billion had been wiped off tobacco excise projections to 2029, with about one in five smokers shifting to illicit cigarettes or vapes.
In response, federal Labor committed $157 million across two years for federal health, crime and tax agencies to strengthen enforcement and target crime gangs.
NSW Opposition Leader Mark Speakman said he would not advocate for a reduction in the excise.
He said it was up to the Commonwealth to determine the excise and states to enforce the law.
“This is a matter for NSW Health but clearly it has been incapable, and Chris Minns has been incapable, of tackling this scourge,” he said.
Mr Speakman said an inquiry was considering enforcement alternatives.
Mr Minns said on Monday he wanted health officials running hospitals, not criminal investigations or enforcing bans on nicotine vapes.
An estimated one in five adolescents vaped at least occasionally in 2024, up from one in 40 adolescents in 2019.
