Smoking Down Under: Australia's Pricey Packs Fire Up the Black Market

Australia’s tobacco crackdown offers a cautionary tale for the US: well-intentioned policies can backfire if cigarette prices skyrocket and less harmful alternatives are banned. 

If you’re an Aussie who smokes, the cost of lighting up these days is enough to make your eyes water. As of September 2025, the tax on a basic 20-pack now sits at around US $19.50, accounting for roughly 70% of the total price. This means that the total cost of popular brands is US $26–29, while premium cigarettes can go for US $32–45. 

Governments add tobacco excise taxes to protect public health and raise money, but what happens when adults who smoke don’t have access to alternative nicotine products? Nicotine pouches cannot be legally sold in the country, and vapes require a prescription and a trip to the pharmacy. What’s a budget-conscious smoker to do?

They might consider buying cigarettes for sale in the shadows. A knock-off black market pack can cost as little as US $5, with most street prices in the range of US $6.50–10. It’s easy to see the temptation for someone already spending hundreds on cigarettes each month. Why fork over $35 when you can spend $10?

The trouble is, that discount comes with another price. Australia’s booming illicit tobacco trade has become fertile ground for organized crime. Since 2023, there have been at least 250 firebombings targeting tobacco stores. 

Policymakers are split on what to do. Some proposed freezing or even cutting excise taxes, arguing that sky-high legal prices are fueling the black market. Others counter that lowering taxes would undercut public health goals, and the real solution is stronger law enforcement. Millions have been spent on border and retail crackdowns, but critics argue the problem is outpacing the response.

The problem isn’t going away. Projections suggest that illicit tobacco sales could overtake legal ones within a year or two. If that happens, the government loses billions in excise revenue, criminal networks pocket more money, and the violence could escalate further.

The Australian reality is stark. Smoke-free alternatives are scarce, legally sourced cigarettes are shockingly expensive, and illicit packs are tempting for budget-conscious smokers. This landscape prevents smokers from switching to less harmful products, shrinks tax revenue, and benefits a violent black market.