Higher federal tax excises are fuelling Victoria's rampant tobacco black market and a standalone agency should enforce its long-awaited licensing scheme, an inquiry has found. or signup to continue reading In a tabled in state parliament on Thursday, the Labor-chaired Public Accounts and Estimates Committee estimated Victoria's tobacco market was worth $6 billion in 2023. Up to 40 per cent of that could be made up of illegal cigarettes, vapes and other tobacco products based on varying estimates.
Several drivers have contributed to the extensive black market in illicit vapes and cigarettes, the inquiry found. Chief among them was the price differential between legal and illicit cigarettes, absence of a licensing scheme, lack of enforcement activity and minor penalties for illegal activity. "The 'low‐risk high‐reward' nature of these commodities have attracted overseas crime syndicates to the lucrative market," the report said.
In May 2023, federal Health Minister Mark Butler announced the tax on tobacco would increase five per cent each year for three years from September 1, 2023. The inquiry found higher tax excises have made legal tobacco prohibitively expensive, coupled with inflation and subsequent cost‐of‐living pressures. A fixed percentage of revenue from the Commonwealth's tobacco excise should be given to state and territory governments to support increased regulatory and enforcement activities, it said.
Victoria will become the only Australian state or terri.