‘Crazy’: NSW Premier Chris Minns blames tobacco excise for thriving illegal trade

Chris Minns has again slammed the annual tax increase on cigarettes and blamed it for the rise in black market tobacco across the state.

The NSW Premier spoke to KIIS radio’s Kyle and Jackie O days after he called on the federal government to consider lowering the tobacco excise.

He also suggested repurposing police resources from major organised crime networks and domestic violence cases to instead address illegal tobacco sales.

“It’s probably not a popular thing for a premier to say because there’s been a tax on cigarettes and excise on cigarettes for decades, and I understand that, but they’ve been radically increased since 2019,” he said on Wednesday.

“So a pack in 2019, 2020, cigarettes had a $16 tax on it. Today it’s $28 – a 75 per cent increase.

“This is a crazy thing, that the government used to collect $16bn in revenue and now it’s come all the way down to about nine billion.

“It’s the only tax in the world, Kyle and Jackie, that they’ve doubled, and the revenue has declined and all of that money has gone into the black market.”

The tax was first introduced in 2010 as an annual 25 per cent increase to reduce smoking rates, and then in 2023 the federal government announced the excise would grow by 5 per cent annually for three years.

Mr Minns said most of the illegal tobacco came from overseas, with the explosion of black market cigarettes sending huge amounts of money into the hands of organised crime gangs.

The Australian Border Force estimates they control about three-quarters of the trade.

“There’s many things I hate about it, but there’s two things in particular,” Mr Minns sad.

“Firstly, there’s a whole bunch of law-abiding people who go about their lives. They wouldn’t break the law in a million years, but they’re being dragged into a black market where they go to the store, they can either buy a 17 or $20 packet of illegal cigarettes or a $60 packet of cigarettes.

“It’s just a no-brainer for them.”

On Wednesday, NSW Treasurer Daniel Moohkey confirmed he would be “engaging” with his federal counterpart, Jim Chalmers, on questions surrounding the tobacco excise.

“It’s important that we all recognize that illegal tobacco has spread and that it is a real problem… It’s concerning people in NSW and it’s concerning lots of parents.”

Asked about reducing the excise, Mr Moohkey said “let’s just acknowledge that there’s an interaction. But, I definitely think that you need a whole of government solution.

“You need a variety of policy levers you want to be applied at the same time in order to give people confidence they will following the law when it comes to tobacco distribution.”

Mr Minns told Kyle and Jackie O Health Minister Ryan Park was also likely to raise the issue at an upcoming health ministers meeting.

“Every tax and every tax change starts with an idea,” Mr Minns said.

“Every single one of them, someone’s saying, ‘Look, I don’t think this is working, we need to change and so we might as well get the ball rolling here’.

“We have to make a decision because what’s happening with these elite illegal tobacco stores is they’re pushing out hot bread shops, small businesses, retail stores, they’re pushing out restaurants because it’s so lucrative they can just take the rent at a higher price.”

When asked whether purchasing the illegal tobacco was a crime, Mr Minns said the offence was prior to the sale.

“There’s an enormous amount of money now circulating in that black economy that’s going to create a whole bunch of other problems,” he said.“I don’t want people to smoke by the way … but we have to be honest about it, realistic about what’s going to happen.”

Illicit tobacco sales are investigated by NSW Health, with more than 20 compliance officers tasked with managing the tens of thousands of tobacco stores statewide.

Cigarette prices in Australia are considered to be one of the highest in the world, according to the World Health Organisation.

Taxes account for about three-quarters of the price.