An Australian Senate committee has called for wider legal sales of regulated nicotine vapes and an immediate freeze on tobacco tax rises, warning that the country’s current approach is “facing a breaking point”.
The Liberal-led majority report from the Senate Legal and Constitutional Affairs References Committee made 12 recommendations aimed at weakening a black market increasingly controlled by organised crime.
These include replacing Australia’s pharmacy-only vape system with regulations similar to New Zealand’s, pausing further tobacco excise increases and commissioning an independent review to determine whether the tax should be cut.
The recommendations were not unanimous, with Labor and Greens senators issuing separate dissenting reports opposing wider vape sales and disputing the case for an immediate reduction in tobacco tax.
Pharmacy-only vape model blamed for illegal sales
Under Australia’s current rules, all vapes can legally be sold only by participating pharmacies for smoking cessation or the management of nicotine dependence.
Adults can buy products containing no more than 20mg/ml of nicotine without a prescription after consulting a pharmacist. Purchases are limited to one month’s supply, while legal flavours are restricted to mint, menthol and tobacco.
The committee concluded that this system was failing to provide smokers with an accessible alternative to cigarettes.
It said: “The current pharmacy-only retail model for vapes has pushed consumers towards the black market.”
The report cited an estimate from the Office of the Illicit Tobacco and E-cigarette Commissioner that 95.7 per cent of all vapes sold in Australia were illegal.
It recommended adopting rules similar to those introduced in New Zealand in 2020, allowing regulated nicotine vapes and other non-smoking products to be sold as a “comparatively less harmful alternative for Australian smokers”.
The committee did not set out a detailed retail framework, including which businesses should be allowed to sell vapes or the licensing and age-verification requirements that would apply.
Committee demands immediate tobacco tax freeze
The report also called for an immediate pause to any further tobacco excise increases, including the automatic indexation normally applied in March and September each year.
It said the freeze should remain until the illicit tobacco market had been meaningfully reduced.
The committee went further by recommending a reduction in the excise as part of a wider package covering enforcement, border controls, public education and improved access to lower-risk nicotine products.
However, it did not propose a specific tax rate. Instead, it called for an independent review to publish modelling showing how different excise levels could affect smoking, government revenue and the black market.
At the time covered by the report, tobacco excise stood at about A$1.53 (€0.95) per cigarette. The tax on a typical pack of 20 was A$30.57 (€18.88), accounting for around 71.5 per cent of its A$42.99 (€26.55) retail price.
How much nicotine is now bought illegally?
The report relied heavily on experimental figures from the Australian Bureau of Statistics, which estimated that illicit products accounted for a massive 80 per cent of the quantity of nicotine consumed in Australia in 2025.
That figure includes illegal cigarettes and loose tobacco alongside vapes and other nicotine products. It is therefore broader than an estimate of the illicit cigarette market alone.
The ABS found that total nicotine consumption had increased by almost 40 per cent since 2017, while consumption of legal tobacco had fallen to less than a third of its previous level.
A separate estimate from the Illicit Tobacco and E-cigarette Commissioner placed illegal tobacco at between 50 and 60 per cent of the tobacco market in 2024-25, worth between A$4.1 billion (€2.53 billion) and A$6.9 billion (€4.26 billion).
The latest Australian Institute of Health and Welfare survey found that 34 per cent of people who smoked had recently bought or were currently smoking illicit tobacco.
At the same time, daily smoking among Australians aged 14 and over fell from 8.3 per cent in 2022-23 to 5.6 per cent in 2025. The differing figures measure different things: the quantity consumed, the estimated share of the tobacco market and the proportion of smokers reporting illicit use.
Stronger enforcement and national licensing proposed
Alongside its tax and vaping recommendations, the committee called for greater investment in border protection and enforcement, nationally consistent tobacco licensing and penalties, improved intelligence sharing and a track-and-trace system for legal tobacco.
It also recommended modernising Australia’s cargo-screening infrastructure, strengthening powers to shut down illegal websites and making Australia Post part of the national group responsible for disrupting illicit tobacco.
The Australian Criminal Intelligence Commission told the inquiry that competition for the illegal market had been linked to more than 200 firebombings, at least three deaths and other violent attacks.
Labor and Greens reject key recommendations
Labor senators Jana Stewart and Dorinda Cox agreed that organised crime and illegal tobacco required a stronger, coordinated response. However, they said there was “no credible or compelling evidence or modelling” showing that cutting the excise would dislodge established criminal suppliers.
They noted that illegal cigarettes could remain cheaper even if the tax were substantially reduced. The Illicit Tobacco and E-cigarette Commissioner told the inquiry: “Illicit trade can always be cheaper.”
Labor’s dissenting report nevertheless left open the possibility of reconsidering future excise rates if credible modelling showed that tax changes combined with additional enforcement could reduce the illegal market.
Labor senators strongly opposed wider vape sales, while the Greens said reducing tobacco taxes could make cigarettes more accessible and increase smoking. The Greens supported several of the enforcement recommendations, including national coordination, stronger data collection and a track-and-trace system.
One Nation backed the majority report but called for a much larger and immediate reduction, proposing that tobacco excise be cut to 25 per cent of its present level until the illicit market was under control.
The committee’s recommendations are advisory. Any change to vape regulation or tobacco taxation would require action from the Australian Government.
