Opposition Leader Angus Taylor has declared an 80 per cent cut to Australia’s tobacco excise will “smash” the business model of organised crime, as he faced repeated questions over whether tobacco companies and retailers would actually pass the massive savings on to smokers.

Mr Taylor was forced tp defend the Coalition’s controversial tobacco policy on Sunrise on Thursday, arguing Australia was already facing a “national organised crime crisis” fuelled by the booming illicit tobacco trade.

“We need to destroy the business model. We need to ensure we take away the profits, take away the customers and hit what is left with the full force of the law,” Mr Taylor said.

The Opposition Leader conceded cheaper cigarettes carried public health concerns but argued Australia had already lost control of the illegal market.

“In terms of cheap smokes, sadly, the horse has already bolted,” he said.

“You can go to any part of Australia and get smokes for $15 a pack or less.”

Mr Taylor said the current approach had failed and was helping fund organised crime, pointing to the string of arson attacks linked to the illegal tobacco trade.

Under the Coalition proposal, the tobacco excise would be slashed by 80 per cent in an attempt to make legal cigarettes more competitive with black-market products.

The plan would be accompanied by $200 million in joint federal and state support targeting organised crime and illegal tobacco.

But Sunrise host Natalie Barr repeatedly pressed Mr Taylor on what would force tobacco companies and retailers to pass the excise saving on to customers rather than pocketing it.

“The wonderful thing about competition is it passes on savings. That’s what it does,” Mr Taylor said.

Barr responded, “It’s not at the moment though.”

Mr Taylor argued the problem was that competition was currently coming from criminal operators, pointing out illegal cigarettes could already be purchased for as little as $10 a packet.

“We have to take that market out, replace it with a legal market, get rid of the organised crime, destroy the business model, and then hit organised crime with the full force of the law,” he said.

Barr continued to question whether laws would need to be changed to ensure the savings were passed on.

Mr Taylor said the Coalition had been working on the proposal since the beginning of the year and had consulted the Parliamentary Budget Office to determine the size of the excise reduction needed.

“We’re very confident at an 80% cut. We will smash the business model of the the criminal gangs who are supporting illegal tobacco,” he said.

“We know that is the point at which that business model simply doesn’t work anymore.”