Retailers risk jail for cheap cigarettes under new laws

Under previous customs rules, it had to be proved illicit tobacco was being knowingly imported illegally.

The reforms mean cigarettes sold for less than the amount of excise and GST, presented in different packaging or concealed from display would be enough grounds for authorities to charge.

Maximum penalties for selling illicit tobacco have also been increased to 10 years in prison, a spokesperson for Assistant Customs Minister Julian Hill said.

The measures would bring customs rules up to date and make it easier for law enforcement agencies to prosecute illegal sellers, Mr Hill said.

"It'll give powerful new tools to border force, but every state and territory police force to go after the crooks," he told ABC Radio on Thursday.

"This is a major global problem and Australia's not immune. 

"It's this massive surplus of cheap production of stuff for less than $1 a pack that's been weaponised by serious and organised criminal syndicates flooding national borders.''

The measures follow a coalition pledge to cut the tobacco excise by 80 per cent to stop the rise of illegal cigarettes.

One Nation has similarly said it would cut the excise by 75 per cent, eroding the profit incentive attracting crime syndicates to the trade.

About 80 per cent of all tobacco consumed in 2025 was illegal, up from 12 per cent in 2017, according to Australian Bureau of Statistics estimates.

At the same time, the tobacco excise has more than tripled.

Opponents have said the 34 per cent increase in the excise since the government came to office in 2022 has contributed to a burgeoning black market and a wave of fire bombings on tobacco and vape sellers.

Prime Minister Anthony Albanese on Wednesday left the door open to cutting the tobacco excise, but said making legal tobacco and vapes more affordable would not help.

"State governments as well have a responsibility to crack down on shops that are selling illegal products," he said.

Mr Hill said he expected support across the parliament for the customs changes.

"They're exactly the powers which our law enforcement officials have been asking for," he said.

"The way to really hurt these crooks is to go after their cash and their houses and their boats and their cars and their toys and take the profits of their crime off them."

Opposition Leader Angus Taylor would not say whether the coalition would support the bill because it had not had the time to examine it.

"If you want to destroy the business model of illicit tobacco in this country, the organised crime, the gangs that are behind it, you have to take the profit and the customers away from it," he told reporters.

"Law enforcement matters, but you have to start by taking the profit away from the business model, and then smash what's left with law enforcement."

The Victorian Labor government also unveiled new measures to tackle the scourge, giving Tobacco Licensing Victoria and state police new powers to close down illegal tobacco retailers. 

Businesses that ignore closure orders will face fines of up to $2.5 million and 20 years in jail.

But Victoria's opposition liquor and gaming spokesman Tim McCurdy said the government's tough talk achieved nothing.

Melbourne has emerged as one of the epicentres of the illicit tobacco trade, with a suspicious fire at a tobacco store in Sunshine on Tuesday the latest in a long line of apparent arson attacks connected to the black market.

"Victorians don't want more grandstanding statements - they want the firebombings to stop and the streets to be safe," Mr McCurdy said.