Jim Chalmers rejects lowering tobacco excise in post-budget National Press Club address

Jim Chalmers says he won’t cut the falling tobacco excise, despite revenue from the tax plumetting in recent years as smokers seek out illegal but cheaper sources on the black market. Figures revealed in Tuesday’s budget forecast revenue from the tobacco excise will beef up the budget bottom line by $7.4bn, more than $4.1bn less than the amount forecast about a year ago. Over the forward estimates to 2028-29, revenue from the tax will drop by $6.9bn from figures published in December, with the excise drawing in $34.7bn. Despite this, rates of smoking and now vaping have not dropped, with criminal syndicates profiting off nicotine dependence. While a legal pack of 20 to 25 cigarettes will cost about $50, those procured through the black market are about $15 to $20. Currently cigarettes are taxed at just more than $1.40 per stick, meaning the excise on 20-cigarettes pack is about $28. The excise is also indexed by a factor of 1.027 in March and September, plus an additional 5 per cent every year on September 1. However, the Treasurer said he would rather “give tax relief to every Australian taxpayer than to provide tax relief for smoking”, and rejected calls for reducing the excise. Despite this he acknowledged the “substantial problem” in the decreasing tax revenue. “There are two ways (tobacco excise revenue) comes down,” he told the National Press Club on Wednesday. “The good way is more people give up the darts. We want that. “The bad way is that more people avoid the tax and we’re seeing in organised crime and other ways there’s been an increase in that kind of often violent tax evasion.” Instead he said the government would tackle the illegal tobacco market through $157m in enforcement and compliance measures, including nearly $50m in funding to the Australian Federal Police and $40m to state and territory authorities. Delivering the speech, Mr Chalmers said the federal election, due before or on May 17, will be a “referendum on Medicare”. He also targeted the Coalition’s opposition to Labor’s cost-of-living support, with the most recent spar highlighted by the Opposition’s rejection of the $5-a-week tax cuts set to come into effect from July 1, 2026. “It means this parliamentary term finishes like it started: Labor helping Australians with the cost of living and Peter Dutton and the Coalition trying to prevent it,” he said. “The Liberals and Nationals have now opposed three tax cuts, three times in three years.” NED-13441-Revenue-and-spending-2025-26 He also paid tribute to Anthony Albanese’s leadership and the work of Finance Minister Katy Gallagher. He said the Prime Minister’s leadership has been “defined by his compassion, his optimism – and his determination,” and praised Senator Gallagher for her “calm and composure,” and “empathy and judgment”. “His (Mr Albanese’s) collaborative style of leadership is appreciated by all of us in his team. Katy and I told the Cabinet yesterday that we consider ourselves very fortunate to have been so well-supported by so many ministers, a number of them here today and I thank and acknowledge them again,” he said.