Laura Hunter
When Canada cut its tobacco excise in the 1990s, between 30,000 and 40,000 people died prematurely by smoking more, modelling has shown.
When certain voices run the tobacco industry line that the only way to counter illicit tobacco is for Australia to follow Canada’s example, they omit how many deaths it caused there.
That call is often made in media commentary, and the Coalition will add to it again this week when a Senate committee into illicit tobacco finally tables its report.
Yes illicit tobacco and its criminal links make our community fearful and angry. But in finding a lasting solution, we need to disconnect that urgent need to act with the simplest sounding three-word answers – as in ‘cut the tax’.
The argument is superficially appealing. Illegal cigarettes are cheaper than legal ones; therefore, make legal cigarettes cheaper and the illicit market will shrink and once that’s done enforcement can largely mop up the criminals.
But Australia cannot price-match organised crime. Illicit cigarettes can cost as little as US 20 cents a pack to manufacture. Criminal suppliers pay no Australian tobacco excise, do not comply with product or workplace laws, and bear none of the costs of a legitimate business. Even a very large tax cut would leave them room to undercut the lawful market and profit.
If legal prices fell, criminal suppliers could simply lower their prices again. Would Australia then cut the excise again? And keep cutting?
That is not a strategy to reclaim control from organised crime and protect Australians from the scourge of tobacco and addiction. It is a race to the bottom — where the outcome is that cigarettes become more affordable for everyone else.
Excise cut proponents argue that Canada’s 1990s tax cuts, combined with enforcement, offer Australia a blueprint. But Canada’s major tobacco companies were later penalised more than C$1 billion after admitting conduct connected with the illicit supply of their cigarettes.
Canada’s crisis was not simply a case of high tax attracting generic criminal smuggling. Untaxed Canadian cigarettes were exported to the United States and smuggled back into Canada, with major tobacco companies implicated in supplying product into illicit channels.
The industry then had a powerful interest in promoting tax cuts as the solution to a contraband crisis in which it had played a role. And it could almost guarantee that smuggling would immediately decrease, given it was removing itself as a prime mover in that ecosystem.
Australia’s situation is different and much more complex. Our illicit market is supplied through transnational criminal networks, including cheap, mass-produced products imported from overseas. The solution must be to disrupt that supply chain, regulate the retail market and properly resource enforcement — not make cigarettes cheaper for the whole population.
Canada is a warning, not a model
In 1994, Canadian governments reduced tobacco taxes in response to contraband concerns, particularly in Quebec and Ontario provinces. The cuts made legal cigarettes cheaper, and the public-health consequences were immediate. Cheaper cigarettes make it harder for people to quit, make it easier for young people to start, and increase the risk that former smokers will return to smoking.
The World Bank likewise found that the tax reductions resulted in substantial increases in youth initiation and tobacco consumption. It also found that illicit trade later resurged.
We know that enforcement matters. Australia urgently needs better resourced, coordinated enforcement across the supply chain. But it is simply wrong to suggest that cutting tobacco taxes was a clean, durable solution to Canada’s illicit trade that allowed law enforcement to finish their job, nor that there was no health cost.
New analysis puts that cost into human terms.
In a 2026 article in Addiction, Professors Prabhat Jha, Sarah Lewington and Emily Banks estimated that Canada’s 1990s tobacco-tax cuts resulted in an additional 30–40 billion cigarettes being consumed above baseline trends. Based on the well-established relationship between cigarette consumption and premature mortality, they estimate that this additional consumption may have contributed to approximately 30,000–40,000 excess deaths.
They were people who may have continued smoking when they otherwise would have quit. Young people who took up smoking because cigarettes became more affordable. Families who lost a parent, partner, sibling or friend prematurely because governments chose to reduce the price of tobacco.
That is the human consequence that disappears when tobacco excise is discussed only as a revenue measure, a policing problem, or a comparison between legal and illicit prices.
Australia has achieved its lowest smoking rate ever recorded because governments have steadily made tobacco less affordable, less available and less normal, while supporting people to quit. Daily smoking among people aged 14 and over is now 5.6 per cent.
The illicit market threatens that progress, but the answer shouldn’t be to abandon it.
Governments should make illicit tobacco harder and less profitable to import, distribute and sell. We need stronger retail licensing, rapid closure powers, meaningful penalties, landlord accountability and enough trained compliance officers to enforce the law.
The Commonwealth should establish national licensing for tobacco importers and wholesalers, so tobacco can enter and move through Australia only via vetted, accountable businesses. Wholesalers should supply only licensed retailers. This is how governments begin to disrupt criminal supply before it reaches local shopfronts.
There is a legitimate debate to be had about how Australia responds to illicit tobacco. But a proposal to slash tobacco excise deserves to be tested against the full evidence — not just selected recollections of one part of Canada’s history.
We should be deeply wary of any proposal that treats lower tobacco taxes as a cost-free fix for crime. Canada shows they are not.
You cannot price-match criminals but you can make a deadly product more affordable — and the result will be more smoking, more disease, and more deaths.
Laura Hunter is CEO of the Australian Council on Smoking and Health (ACOSH).
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