Approximately 80% [1] of cigarettes and vapes consumed in Australia are estimated to be illegal black-market products.

This surge in illicit consumption suggests that aggressive tax policies intended to reduce smoking may instead be fueling an unregulated shadow economy. The shift undermines public health controls and reduces government tax revenue.

According to analysis from the Australian Bureau of Statistics, the 80% [1] figure refers to consumption during the 2026 calendar year. This rapid growth in the black market is attributed to the steep increase in tobacco excise taxes, which has made legal products prohibitively expensive for many consumers [2].

Mainstream cigarettes in Australia have reached an average price of AU$54.99 per pack [3]. This pricing has created a significant gap between legal retail costs and the price of illicit alternatives.

Caleb Bond, a host for Sky News Australia, discussed the impact of these policies on the market. "Now I've often spoken about the extortionate tobacco tax on this program and how it's exploded the illicit tobacco market," Bond said. He noted that 80% [1] of the market is now illicit according to the Bureau of Statistics.

The Australian government has historically used high taxes to discourage smoking, a strategy known as "taxing smoking out of existence" [3]. However, the data indicates that consumers are opting for illegal sources rather than quitting the habit entirely.

Illicit tobacco products often bypass the safety and quality regulations applied to legal goods. This creates additional risks for users who cannot verify the ingredients or origins of the black-market vapes and cigarettes they purchase [1].

“80 per cent of the market now, according to the Bureau of Statistics.”

The data highlights a critical failure in the 'tax-and-quit' public health model. When the price of a legal addictive substance exceeds a certain threshold, the resulting price elasticity drives consumers toward criminal enterprises. This not only creates a public health risk due to unregulated product quality, but also suggests that high taxes may be ineffective as a cessation tool if a robust black market is available to fill the void.