Australia’s illicit tobacco market has shrunk for the first time in five years, with the volume of contraband in circulation falling by 24 per cent in the past financial year.
The decline coincided with record seizures of illegal cigarettes and tobacco, although the precise size of the black-market sector cannot be calculated. It is estimated to have contracted by as much as 1,438 tonnes.
Assistant Customs Minister Julian Hill said the figures showed that enforcement action was having an impact.
“Every illicit cigarette seized, every store closed and every network disrupted sends the same message to criminals: we know who you are, we know how you operate, and we’re coming after you and your profits,” he said.
“The government’s investment in enforcement to crack down on illegal tobacco, along with public health measures to curb demand, is showing results.”
Record seizures by Australian Border Force
Australian Border Force seized more than 730 tonnes of illegal tobacco in the first quarter of the current financial year, the highest figure recorded. The seizures also included 3.75 million vapes, an 18 per cent increase on the same period a year earlier.
Despite the reported fall in the illegal market, figures released by the Australian Bureau of Statistics in June indicated that 80 per cent of tobacco came from illegal sources in 2025.
High taxes on legal cigarettes have been blamed for encouraging the illicit trade. One Nation and the Coalition have separately proposed cutting tobacco excise by 75 per cent and 80 per cent respectively, arguing that this would reduce the financial incentive to import and sell illegal products.
The federal government has rejected calls to reduce the tax, saying such a move would lead to higher smoking rates.
A national operation targeting illicit tobacco, led by the Australian Border Force, conducted more than 600 operations during its first year. It seized more than 24 million illegal cigarettes and 3.6 tonnes of loose-leaf tobacco.
Assistant Commissioner Tony Smith said the operation was intended to do more than remove illegal products from circulation.
“Our objective isn’t just to seize illicit tobacco; it is to create sustained pressure that disrupts criminal business models and changes the way offenders operate at every stage of the supply chain,” he said.
