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Manufacturing a pack of cigarettes (paper, filter, processed tobacco, packaging) still costs well under A$2 per unit, including shipping and logistics. But by 2020, the same legal pack retailed for over A$50 in Australia; most of that was “health” tax by the feds.

Since 2000, Australia had pursued aggressive tobacco tax income through excise hikes. From 2013 to 2020, cigarette taxes rose more than 12.5% annually. By mid-2020, theprice crossed a psychological barrier: one day, a carton of cigarettes cost more than the average weekly food bill. That was the crossover point.

The illicit tobacco market transformed from a niche import operation into a parallel economy. Illicit consumption rose from around 14% of total cigarette use to an estimated 25-40% within three years.

Public health advocates still argue that high prices discourage smoking, as if their jobs depend upon it (it does). But beyond a certain point, taxation starts to distort markets. Australia crossed that point around 2020. Today, the government taxes cigarettes as if no black market exists. The black market operates under the assumption that legitimacy is irrelevant.