Unintended Consequences

Australia Tried To Tax Smoking Out of Existence. Now 80% of Tobacco Aussies Consume Is From the Black Market.

With cigarettes costing around $40 a pack, Australia’s war on smoking has become a case study in how prohibitionist policies create black markets, violence, and criminal power.

Reem Ibrahim | 6.5.2026 3:26 PM

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The Australian government has spent the last decade introducing steep tax hikes to curb smoking, and, as a result, the country has the most expensive cigarettes in the world. The average price of mainstream cigarettes is 54.99 Australian dollars per pack (about $40). But the eyewatering prices have driven people to the black market.

In 2025, an estimated 80 percent of the tobacco consumed in Australia was illegal, up from 12 percent in 2017, according to new analysis from the Australian Bureau of Statistics (ABS). The study, which is the first attempt by the Australian government to estimate the size of the black market, found that "prices for legal tobacco products have almost tripled since December 2016 driven by annual tobacco excise increases, while estimated prices of illicit tobacco products have remained relatively constant." Since 2020, household spending on legal cigarettes and tobacco has almost halved, but........

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