Treasury acknowledges that less is more with tobacco taxes

Thursday 19 February 2026

Tobacco excise has climbed by around 60% since 2020 and now accounts for more than two-thirds of the legal cost of a packet of cigarettes.

While illegal cigarettes are easily accessible and cost between $10 and $15 for a pack of 20, a legal packet of cigarettes now costs $40 or more.

Therefore, despite higher taxes, the federal government has recorded a significant decline in tobacco excise revenue, which is projected to decline further:

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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.