By Mirabelle Mirvis, Emilia Louw, Chris McCarthy and Myah Mourched
Michael was just 16 when he smoked his first cigarette. Now, aged 52, he goes through up to 20 every day.
“Cigarettes [then] were around the $10 mark,” he says. “In a couple of years, you’re going to be buying it for $100.”
At a legitimate retailer, the habit now costs Michael about $50 per day, an increase he says he can no longer afford.
The cost of a packet is dominated by a government excise, which has increased by 5 per cent every six months.
The rapid increase of the levy in recent years has left smokers like Michael without much option. As a result, he turned to purchasing blackmarket cigarettes in 2024.
The Federal Government defines illicit tobacco as products either manufactured in Australia without license or smuggled into the country, skirting packaging and health regulations.
Australia has taxed tobacco since the 1980s, but the rate at which the excise has increased has accelerated in recent years in a bid to price smokers out of their addiction.
Definitely 90, 95 per cent of people, all buy the black market cigarettes, and for the same reason – price.
Michael, smoker of illegal cigarettes
Penalties and offences for the production and distribution of black market products have also increased in recent years, while Australia has become home to some of the highest tobacco taxes
in the world according to the United Nations.
The government maintains this is working, with the country’s smoking rate dropping from almost 20 per cent of adults in 2001, to just 8.3 per cent in 2023.
Despite this, national wastewater data shows nicotine consumption has hit an all-time high in Australia, increasing by 4 per cent in 2024 alone.
Michael says almost every smoker he knows buys illicit tobacco. A concern the government is attempting to get on top of with enforcement crackdowns for shops selling, and criminal groups distributing the products.
“Definitely 90, 95 per cent of people, all buy the black market cigarettes,” he says. “And for the same reason [price].”
In a survey conducted by Central News, 94.1 per cent of respondents said higher cigarette prices as a result of taxation were the primary driver of the illicit tobacco market.
A strong public consensus the illicit tobacco market is fuelled by taxation.
These survey findings align with broader evidence that rising legal tobacco prices, driven by repeated excise increases, have broadened the gap between legal and illicit products, incentivising consumers to seek cheaper alternatives.
When Michael first made the switch away from the plain-packaged, legal cigarettes, he sourced his black market fix from local tobacconists on the Central Coast. The bill for his daily fix fell to just $15, and despite a noticeable drop in quality, he was a loyal customer for two years until, his regular shop went bust.
“The government is running around closing everyone down,” Michael says. “There’s still some people selling, but it’s a matter of having to travel now.”
The closures are the latest in a state-wide blitz on the booming black market. In April at least 23 stores on the NSW Central Coast were issued 90-day shut-down orders, bringing the total number of closures to over 200 across the state since the health department was given new powers in November 2025.
For Michael, the closures have forced him back on to legal products for the time being. The habit now costs him over $350 per week.
While enforcement is largely relegated to state and territory authorities, there were hopes of Commonwealth assistance in the lead up to the Federal Budget.
Jim Chalmers’ financial blueprint, however, did little to curb fears the trade will continue to grow. The Treasury’s latest outlook for Tobacco Excise revenue was downgraded to just $2.1 billion by 2030, down from a 2020 peak of over $16 billion. The excise itself has increased by over 60 per cent since then.
It’s a really challenging process if the federal government isn’t prepared to have a look at that current excise arrangement.
Ryan Park, NSW Health Minister
Michael could see the issue clear as day, and believes the tax revenue would easily increase if the prices were reduced.
“The easiest thing the government could do is drop a bit of the price of the cigarettes, use the money they’re making and bring it back to the shops so people go back to the shops,”
he said.
While smokers won’t see any hip pocket relief as a result of the budget, the Commonwealth has allocated $17 million to assist with local enforcement programs.
The NSW Health Minister Ryan Park has been spearheading the state’s crackdown on retailers, calling on his federal counterparts for excise relief, but acknowledges this won’t come close to solving the issue.
“We’ve always welcomed, and been appreciative, of funding that we’ve received for enforcement,” he tells Central News. “But that enforcement, whilst being the NSW government’s responsibility, can only go so far.
“It is very difficult when you have a big distortion in price for a legal product versus the illegal product because of the excise imposed on it. That’s the reality. That’s the big mountain that
we’ve got to climb, and it’s a really challenging process if the federal government isn’t prepared to have a look at that current excise arrangement.”
Analysis by KPMG found that, by 2024, legal cigarettes cost more than $50 a packet whilst illicit tobacco was just over $20. Two years later, the excise has been hiked four times since.
Despite billions spent on enforcement, the illicit tobacco market continues to expand, raising questions about whether current policy settings are unintentionally driving the very problem they aim to solve.
Legal cigarette prices in Australia have risen sharply over the past decade, largely driven by excise increases, while illicit tobacco prices have remained significantly lower. (Oxford Economics, KMPG).
Australia has the most expensive cigarettes in the world, nearly double the price of products from the United States and the United Arab Emirates. The underground market has become a multi-billion dollar industry, valued at $5.6 billion in 2025, with as much as 5,397 tonnes smuggled into the country annually.
The UAE and East Asia produce a majority of Australia’s favourite, cheap cigarettes. In 2025 alone, the Australian Border Force seized 2.5 billion cigarettes from Dubai, Hong Kong, Singapore and China.
Blackmarket cigarettes have become readily available in most Australian suburbs, with a study by FTI consulting estimating the illegal trade accounted for almost 40 per cent of Australian cigarette sales in 2024, rising to 50 per cent in 2025. Those numbers increasing from just 14 per cent before the pandemic.
In 2024, 3400 tonnes of illicit tobacco was consumed in Australia, up from just 2500 in 2015.: (FTI Consulting)
The AFP has accused consumers purchasing illegal cigarettes as aiding in organised criminal activity, with profits made going towards other illegal activities including weapon and drug trafficking.
“You don’t want to support [crime] but the government is more worried about billions of dollars they are losing to it,” said Michael.
The NSW government declared the closure of over 100 tobacconists a ‘milestone’, however smokers remain sceptical of the government’s aims to tame the black market.
For Michael, he would switch permanently back to legal tobacco products if they capped pricing to $30.
“If you get them cheaper, I’ll get them cheaper. I don’t see the point of putting money in the government’s pocket,” he said.
The Health Minister won’t put a number on what sort of prices he believes would help return smokers to legitimate products, and has instead called for more analysis to determine the extent of the change required.
“The difference in the product can be anywhere between three and four times more expensive for legal cigarettes versus the illegal counterparts,” says Park. “So what we need from the federal government is more modelling… to bring that price down, to bring that excise down, to bring that taxation down, so we can at least address the issue of the huge price distortion.
“Until we do that, we’re going to face an uphill battle getting on top of these shops popping up everywhere.”
Even though retailers can’t advertise their product, Michael says it doesn’t stop smokers finding their fix when their favourite smoke shop is shuttered.
“You can ask everyone and then it’s the same thing… ‘Where do you get yours?’,” he says. “And when shops are shut down you just ask someone else ‘where are you getting yours now?’ It’s all word of mouth.
“A lot of shops have to sell [illicit] cigarettes to continually make a living.
“I know smaller shops that are making money out of it, their shop doesn’t make any money otherwise.”
For those stores which refuse to bow to the pressure of selling an illegal product, their businesses have been decimated.
When consumption is rising at the same time legal sales are falling, this increase isn’t coming from people suddenly switching to nicotine patches.
Theo Foukkare, chief executive of the Australian Association of Convenience Stores
The Australian Association of Convenience Stores said it wasn’t surprising that wastewater testing found nicotine consumption in Australia to be at its highest level in history.
“This data confirms what we’re seeing on the ground – more Australians are consuming nicotine, but they’re increasingly buying it from the black market instead of regulated retailers,” says chief executive Theo Foukkare.
“When consumption is rising at the same time legal sales are falling, this increase isn’t coming from people suddenly switching to nicotine patches – that’s laughable.”
It’s not just the resurgence of smoking posing a risk to Australians, though. There is concern among health professionals that some illicit tobacco may actually be doing more damage to smokers lungs than the regulated product.
Dr Igor Snitkovsky has been practising as a GP in Ukraine, and now Australia for more than 25 years, and has witnessed the effects of the war on tobacco in both countries.
Snitkovsky identifies two separate issues.
“If smoking products become cheaper, it may increase the number of people who start smoking, particularly in lower socioeconomic groups where the high price of smoking usually interferes with people’s desire to smoke,” he says.
“Tobacco officially purchased in different countries and smuggled into Australia probably doesn’t have a major difference [in health impacts] compared to tobacco sold officially in Australia.
“However, counterfeit illicit tobacco is much more concerning because poor quality control means it can contain additives that may unpredictably impact health. There could be pieces of plastic or other materials that produce toxic fumes when burned, and these fumes can affect people’s health in ways we can’t predict because we don’t know what is inside.”
The federal government warns illicit tobaccos could undo the progress of lessening smoking behaviours, while Snitkovsky argues there is no safe amount of smoking, with studies
suggesting daily usage can up a smoker’s chance of cancers by 7 per cent in comparison to non-smokers.
Jacinta Reddan, CEO of Cancer Council Australia, said the government needs to “step up” its enforcement against smuggled and counterfeit tobacco.
“Two out of three people who continue to smoke will die as a result of addiction to these products,” she said in April.
“The real crisis is that if we continue to allow illicit tobacco to exploit our communities, more of these deaths will happen.”
A closure notice plastered on a tobacco shop on Broadway, Sydney. Photo by Central News.
CCA estimated 40,000 stores were susceptible to criminal activity in areas where only 10 per cent of Australians smoke.
Low socio-economic groups are reportedly most affected by the trade according to the Australian Council on Smoking and Health.
The Australian Institute of Health and Welfare says the black market undermines the quitting efforts of low income communities, who make up some of the largest smokers nationwide.
For daily smoking for low socioeconomic areas, the excise resulted in a steady decrease from 18.1 per cent in 2019 to 13.4 per cent in 2023.
Health experts suggest the black market can exacerbate previous financial and health stresses as well as exposure to organised crime, while there is a growing environmental cost.
For regular smokers like Michael, the purchasing of Illicit tobacco products is primarily for long term affordability. However, once they exit the retail space there is an increased risk for them to cause multiple forms of harm. Tobacco in Australia studies have found the eyesore of discarded cigarette butts to be a significant environmental threat.
Cigarette butts are one of the most common items of rubbish on Australian streets, posing a two-pronged risk. The first being the direct pollution of soil, stripping gardens and bushland of diversity, and the second a risk of contaminating our water supplies.
The outside of a cigarette, a synthetic polymer called cellulose acetate, is essentially a plastic, posing risk of harm to flora and fauna alike. As the illicit trade booms, these risks rise in tandem.
Smokers acknowledge the hazards cigarettes, both legitimate and illegitimate, carry with them.
“It’s not good for you, but obviously it’s my choice to do what I want to do,” Michael says.
“Even if someone gets shut down, they’ll still look around and find someone else.”
Main image by Mirabelle Mirvis.
