Excise revenue collapse backs federal budget into a corner

Friday 19 June 2026

The AFR’s John Kehoe argues that “the government has inadvertently underwritten a tobacco crime wave and is now trying to plug the revenue hole by increasing taxes on capital income”.

He argues that the Treasury has a history of underestimating consumer responses to tax increases and overestimating receipts.

Tobacco excise has risen 28% since 2023, following earlier Coalition increases. Treasury assured the government that higher taxes would raise revenue and reduce smoking.

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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.