Smoking rates higher in poorer, regional areas despite hefty tobacco excise tax

One in three residents of poorer outer suburbs and regional areas are daily smokers despite a doubling of tobacco taxes in less than a decade that has been blamed for a booming black market in cigarettes.

The Coalition is now considering the idea of halving the tobacco excise, with Federal Government revenue from tobacco excise halving even as punitive taxes have doubled.

Shadow treasurer Tim Wilson told The Nightly that Labor had allowed organised crime to flourish, likening the illicit tobacco trade to Construction, Forestry and Maritime Employees Union thuggery on building sites.

“Australians know in the economy Labor built that organised crime are profiting from the illegal tobacco trade or the CFMEU-Labor cartel, so if we take action it needs to unpack their business model for good,” he said.

Kingston in Logan, south of Brisbane, had a 36.5 per cent smoking rate in 2022, just ahead of 36.4 per cent for Yennora in Sydney’s west making them among the highest in the nation, updated Australian Bureau of Statistics data released on Monday revealed.

Bendigo, north-west of Melbourne, had a 29.6 per cent smoking rate, just ahead of 29 per cent for the Cairns suburb of Manoora in far north Queensland.

Walgett in northern NSW also had a particularly high daily smoking rate of 27.3 per cent.

This was much higher than the average of 16.7 per cent for outer regional and remote areas and 9.4 per cent among people living in big cities.

Health experts regard higher smoking rates in poorer areas as a sign of a growing black market in illicit tobacco.

“The costs, from which the excise tax has contributed, is really out of reach for most people that do smoke, so really point to the proliferation of the black market,” University of Melbourne research fellow in health economics Joe Carrello told The Nightly.

“There’s often a big overlap between the regions and rural areas and socio-economic position.”

A 20-pack of Benson & Hedges sells for $65.50 at Coles with each stick incurring a $1.53 excise, meaning tax makes up almost half the cost.

Excise rates are going up again in September, with the taxes indexed twice a year based on the average, full-time salary.

Australian Medical Association president Danielle McMullen said reducing tobacco excise would fail to stop the black market trade, arguing the taxes weren’t designed to raise revenue.

“Even if you removed the tobacco excise entirely, illicit tobacco would still be significantly cheaper than legal options,” she said.

“Focusing entirely on the excise distracts from actually the bigger problem of organised crime and the widespread availability of illicit tobacco and that’s where we need to be putting our energies.”

Higher excise has not led to higher government revenue, with the AMA arguing it’s a law enforcement issue.

“Some of the reduction in revenue generation is because people are turning to that illicit tobacco supply,” Dr McMullen said.

“The Government’s goal — they are not concerned about reducing revenue if it in fact means that Australians are looking after their health and not smoking — but unfortunately, as this data shows, Australians are still smoking and in fact in some age groups and regions, we’re seeing an increase in smokers.”

In the 2018-19 financial year, tobacco excise raised $12.95 billion back when individual cigarettes were taxed at 81.8 cents a stick.

But in the 2025-26 financial year, tobacco excise was expected to raise less than half that revenue at $5.45 billion despite excise per stick almost doubling in less than seven years to $1.53 per cigarette.

Treasury’s Mid-Year Economic and Fiscal Outlook in December revealed projected revenue would be $1.6 billion less than forecast in the March Budget delivered just nine months earlier.