The Black Market’s Price: Tobacco Taxes in Crisis

Dr. Nick Coatsworth, Australia’s former deputy chief medical officer, is advocating for a reduction in tobacco taxes as part of a broader overhaul of the country’s tobacco control policy. This proposal may seem counterintuitive given the rise of organized crime in the illicit tobacco trade, but it highlights a stark reality: decades of steep excise increases have failed to curb smoking and instead driven smokers into the black market.

Australia’s approach to tobacco control has been widely praised for its effectiveness. However, Coatsworth argues that this narrow focus on reducing smoking rates overlooks the consequences of pushing the industry underground. As a result, Australia now boasts one of the world’s most lucrative illicit tobacco markets, with up to 60% of all cigarettes sold in the country coming from black market sources.

The situation is dire: turf wars have led to violent incidents, including firebombings and shootings, as well as the tragic death of an innocent woman and a terror attack. Coatsworth’s advocacy for dropping excise rates to 2019 levels may seem radical, but it’s essential to consider the unintended consequences of policies that prioritize public health victories over fiscal responsibility and the rule of law.

The federal government’s revenue from tobacco taxes has plummeted in recent years, from $16 billion in 2020 to an expected $4.1 billion by 2025-26. Meanwhile, multinational tobacco companies stand to gain a windfall if excise rates are reduced. The Public Health Association of Australia estimates that a 50% cut to customs duties would hand these corporations around $2.3 billion annually.

The debate surrounding tobacco control policy often pits public health experts against the interests of big tobacco and law enforcement agencies. Coatsworth’s stance challenges this binary thinking, arguing that health advice should be just one input among many when shaping policy. This nuanced perspective is essential in addressing a complex issue like the illicit tobacco trade.

While some may view Coatsworth’s proposal as a retreat or betrayal of public health principles, it’s worth examining the underlying drivers of this crisis. The black market has thrived due to a perfect storm of factors: steep excise increases that have pushed smokers into the shadows, inadequate law enforcement, and a failure to address the root causes of addiction.

The Albanese government must now consider whether its current approach is truly effective in reducing smoking rates or merely perpetuating a cycle of violence and corruption. Coatsworth’s call for a cut to taxes on cigarettes highlights the urgent need for a more holistic policy that balances public health goals with fiscal responsibility and law enforcement priorities.

As the Senate inquiry into the tobacco crisis unfolds, it’s clear that Australia’s approach to tobacco control has reached a tipping point. It’s time to rethink the rules of engagement in this long-standing battle against smoking. By doing so, policymakers may uncover a solution that not only saves lives but also brings some semblance of order back to the illicit tobacco trade.

The implications of Coatsworth’s proposal extend far beyond Australia’s borders. As other countries grapple with their own tobacco control policies, they would do well to heed this warning: the black market has no boundaries, and its price is a devastating one.