Published by The Conversation on 17 September 2025: https://theconversation.com/could-making-tobacco-cheaper-actually-cut-down-smoking-rates-we-asked-5-experts-265384
Authors: Becky Freeman, Coral Gartner, Fei Gao, Roger Magnusson, Ron Borland
Australia aims to reduce rates of daily smoking to 5% or less by 2030. By 2023, we got down to 8.3%.
A key tool to encourage smokers to quit has been to raise the tobacco taxes. Now a pack of 20 cigarettes costs over A$40, with the excise making up around 70% of the price.
Meanwhile, illegal cigarettes have flooded the market, often costing $20 or less a pack. People who wouldn’t normally break the law are now buying cheap, illicit tobacco.
Critics of the current tobacco excise argue the tax has stopped working to further reduce smoking rates and should be lowered. But what would this mean for illicit tobacco consumption?
We asked five experts: could making tobacco cheaper actually cut down smoking rates?
Five out of five said no. Here are their detailed responses.
Instead of lowering taxes, we need far fewer tobacco retailers
Becky Freeman, Professor of Public Health
No. Australia has achieved enviable reductions in smoking by adopting a comprehensive range of measures over decades. The tobacco industry has always been critical of this highly successful public health approach. It's now pushing for tobacco taxes to be lowered as a simplistic answer to rising illicit tobacco sales.
However, tobacco taxes are at the centre of Australia’s success story. They helped bring the 2023 regular smoking rates (for people aged over 14 years) below 10%. High tobacco prices are globally recognised as essential to preventing young people from taking up smoking.
Profit-driven retailers, particularly tobacconists, are openly selling illicit cigarettes and deliberately under-cutting public health efforts. They are exploiting people who smoke by making harmful products cheaply and easily available. This further fuels addiction and actively undermines people who are trying to quit smoking.
Instead of lowering taxes, we need far fewer tobacco retailers.
Tobacco companies often argue that governments should reduce tobacco taxes
Coral Gartner, Professor of Public Health
No. When some Canadian provinces reduced tobacco taxes in the 1990s, which made cigarettes cheaper, more young people took up smoking and fewer adults stopped smoking compared to provinces that did not cut their tobacco taxes.
A mountain of evidence shows that making cigarettes more expensive reduces smoking.
For children and teenagers, maintaining a high minimum price on tobacco is a key measure to stop them experimenting with smoking and ending up addicted to a product they never intended to use in the long term.
Higher cigarette prices also assist adults to stop smoking.
This is why tobacco companies and retailing groups that represent and promote their interests often argue that governments should reduce tobacco taxes.
A lower minimum price helps them to retain more of their current customers for more of their shortened life by discouraging quitting.
It also helps tobacco companies recruit new young “replacement customers”, which is crucial to their long-term profits.
When prices fall, consumption rises
Fei Gao, Lecturer in Taxation
If we take the question literally: could making tobacco cheaper cut down smoking rates? The answer is clearly no.
Smoking rates measure the percentage of people who smoke, regardless of whether the tobacco is purchased legally or illegally. Lowering the price of legal tobacco may shift some smokers from illicit to legal products, but it does not reduce the overall number of smokers.
In fact, cheaper cigarettes make smoking more affordable, and economic theory and evidence shows that when prices fall, consumption rises.
But I think the real policy question is different: would lowering tobacco excise raise government revenue?
On this, the answer is far less clear. While a lower excise might reduce the incentive to buy illicit tobacco and boost legal sales, each pack would generate less tax revenue.
Importantly, reducing excise would also undermine decades of health policy that has relied on high prices to discourage smoking.
Tobacco smuggling demands dedicated resources and laws with teeth
Roger Magnusson, Professor of Law and Governance
No. "If you’re serious about [reducing smoking]," the chair of an Australian tobacco company told me, “you put the price up. That’s what drops demand”.
Australia’s problem now is a combination of high prices for taxed cigarettes, but low prices for smuggled cigarettes.
The Rudd and Turnbull governments increased tobacco taxes substantially above CPI (the consumer price index).
But inadequate laws and investment in enforcement created incentives for illicit trade. Margins on smuggled cigarettes were high, penalties light and convictions rare.
Competing with organised crime on price by slashing tobacco taxes – and hoping smokers return to the legal market – risks further encouraging demand.
The entrenched nature of tobacco smuggling, with organised gangs threatening retailers, and fire-bombing each other, demands dedicated resources and laws with teeth.
Penalties for selling illicit tobacco often don't match the financial incentives: fines for businesses are just $40,000 in Western Australia.
In contrast, Victorian businesses can be fined $1.7 million and individuals can face up to 15 years’ prison. New South Wales has introduced similar legislation.
Increasing the price of legal cigarettes could make things worse
Ron Borland, Professor of Health Behaviour
No. The price at which smokers will switch from cigarettes to other products or quit altogether is not the average price but the effective minimum price: the price floor. If the average price could be reduced while increasing the floor price, it could increase price-related pressure to stop smoking and therefore reduce prevalence.
In Australia, the government could reduce the price of legal cigarettes by reducing the tax, but this would have no direct effect on illegal sales, so the floor price would be unchanged, and therefore won't affect smoking prevalence.
By contrast, increasing the price of legal cigarettes could make things worse, by moving more smokers to the cheaper illegal market.
The problem in Australia is that the illegal market sets the floor price for both cigarettes and alternative nicotine products. Making it harder to sell illegal cigarettes should raise the floor price. Alternatively, increasing the availability of cheaper nicotine products such as vapes can make cigarettes seem more expensive and encourage switching to those products.
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No
Increasing the price of legal cigarettes could make things worse
Ron Borland
Professor of Health Behaviour
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