Illegal tobacco boom the hallmark of taxation policy failure

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Australia has seen a major decline in revenue from tobacco excise in recent years, attributed to increases in excise.

A legal packet of cigarettes now costs about $50 (of which $34 is tax and excise), compared to a cost of around $15 for illegal cigarettes, which are readily available.

The growth in illegal cigarettes has seen the Australian Bureau of Statistics (ABS) announce that it is looking at developing methods to measure the consumption of illicit nicotine-related products.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.