One of the nation’s biggest independent retailers has warned that nine out of every 10 cigarettes will be bought illegally by the end of the decade unless the federal government cuts tobacco excise, slashing the price of cigarettes by almost a third.
Ritchies IGA, which operates 150 stores largely across Victoria and NSW, says Treasurer Jim Chalmers could repair the budget by billions of dollars and undermine criminal gangs by reversing years of bipartisan support for ever-higher rates of tobacco excise.
The government’s own illicit tobacco and e‑cigarette commissioner estimates one-in-two cigarettes bought in Australia is now illegal, with up to $11.8 billion in excise evaded by smokers.
Tobacco excise, which at the turn of the decade was the federal government’s fourth-largest tax source, has collapsed. This year, tobacco excise is forecast to raise $5.5 billion compared to the original estimate made in early 2022 of $13.6 billion in the 2025-2026 financial year.
Analysis by Oxford Economics, commissioned by Ritchies, estimates that the drop in excise between 2018-19, when the then government announced a crackdown on tobacco imports, and 2028-29 will cost the budget $67 billion.
