Tasmania’s independent retailers are urging the federal government to overhaul its tobacco excise strategy, warning the black market has grown ‘beyond control’.
Tasmania Independent Retailers (TIR), which represents 80 IGA and IGA-branded stores across the state, says illegal tobacco is now being sold at prices legal operators simply cannot compete with.
A legal pack of cigarettes costs $40 to $50 in Australia, compared with as little as $10 for illicit products.
TIR chair Michael Baxter said the price gap was fuelling organised crime, while governments persisted with ineffective policy.
“They continue to roll out the same tired line that price is the biggest deterrent, while appearing willing to spend more than $400 million of taxpayers’ money trying to enforce what has effectively become an unenforceable prohibition-style market,” he said.
Baxter said Tasmania’s Labor politicians were “missing in action” and questioned why their federal colleagues were not challenging the approach.
The comments follow recent remarks by Assistant Federal Customs Minister Julian Hill, who said high excise rates had been “one of the key drivers” of black market growth, but argued there was “no reasonable level of excise reduction” that would significantly disrupt organised crime.
“Tasmanians are entitled to know who the faceless men and women are advising government to persist with settings that are clearly not regaining control of the market,” Baxter said.
He cited Devonport as an example, saying illegal tobacco was being sold “in plain sight” near elected representatives’ offices.
TIR said unregulated products, including banned menthol flavours, were widely available through illicit channels that pay no excise or GST, with weak age checks increasing the risk of youth access.
2025 research by FTI Consulting suggests illicit tobacco accounts for about half of all cigarettes consumed in Australia.
Federal excise revenue has fallen from more than $16 billion in 2019-20 to about $7.4 billion, according to federal budget data.
Baxter said the solution was to recalibrate “extreme excise settings” and strengthen targeted enforcement.
“This policy disaster is now indefensible – government has effectively lost control of the tobacco market,” he said.
