OLDCORN: Australia’s tobacco tax fiasco offers Canada a smoking hot warning

Australia is living proof that punishing taxes on nicotine can backfire, and Canada should take notice.

Tobacco excise revenue there will tumble to $7.4 billion AUD this year, down from $12.6 billion AUD in 2022‑23, and a peak of $16.3 billion AUD in 2019‑20. 

That is a collapse of more than 50% in five years, even though every cigarette now carries about $1.40 AUD in excise and an extra 10% a year in compound hikes. 

Smokers did not all quit.

They simply moved into the shadows, where organized crime syndicates sell them cheaper contraband.

Ottawa should be watching closely. 

Canada keeps ratcheting up federal and provincial taxes and cumbersome regulations on cigarettes, vaping liquids, and nicotine pouches. 

At the same time, police forces from Vancouver to Halifax report a surge in vape store robberies, often committed by organized crews looking for products they can flip online. 

In a number of Canadian cities, the number of break-ins at vape shops has tripled in the past two years. 

Online marketplaces now teem with unregulated cigarettes, vape pods, and flavoured nicotine pouches.

All shipped quietly by mail, no ID, or tax stamps required.

While those looking for legal flavoured nicotine pouches only have mint or menthol options, as those are the two flavours Health Canada allows Zonnic to sell only at pharmacies.

Not to mention that Zonnic is the only brand legally allowed to be sold in Canada.

While the illegal online stores are selling every flavour you can imagine.

Australia’s mess shows how the cycle spins. 

When legal packs cost more than $300 a carton, consumers hunt cheaper options. 

Last year, $6 billion AUD worth of illicit tobacco entered that market, triple the estimate from 2016‑17. 

Criminal networks pocket the money, legal retailers lose sales, and taxpayers fund an ever costlier enforcement chase, another $156 million AUD in the latest Australian budget, on top of $188 million AUD earmarked a year earlier. 

The Australian public purse bleeds at both ends.

Health officials defend steep excise as an effective way to curb smoking, and they have a point. 

Daily smoking in Australia has slid to 8%, down from nearly 20% in 2001. 

But that decline owed much to gradual, predictable increases, graphic warnings, and strong smoking cessation programs. 

The recent rise in taxes crossed a tipping point. 

Shoppers still want nicotine. 

They just refuse to pay sky-high government set prices.

Canada risks the same trap. 

The Canadian federal taxes on nicotine products go up every year. 

Provinces from Ontario to British Columbia have tacked on their own surcharges. 

Meanwhile, the RCMP warns that counterfeit nicotine pouches containing high doses of synthetic nicotine are pouring into the country. 

These goods dodge excise and safety checks, undermining the very health goals behind the tax hikes.

Lawmakers in both countries now lean on labelling. 

Starting on April 1, Australia will require each cigarette stick to display a warning such as “causes 16 cancers.” 

Australian retailers get only three months to sell their old stock or they have to throw them out. 

Honest shops will scramble, smugglers will shrug and say “who cares, doesn’t affect my business.” 

In Canada, Ottawa plans plain packaging for vaping devices next year. 

Again, the illicit market will likely ignore the rule, keeping its edge on price, convenience, and flashy packaging.

There is a smarter, two‑track path. 

First, narrow the gap between legal and illegal prices. 

A modest excise rollback.

Yes, a cut would lure smokers back into the regulated system where age checks and quality control actually apply. 

Canada tried this in 1994 after cigarette smuggling spiralled out of control. 

The federal excise was slashed, police seized river‑smuggling routes, and legal sales returned almost overnight. 

Smoking continued to decline over the long term, and tax revenue rebounded as the rate crept up again at a sustainable pace.

Second, embrace harm reduction tools instead of taxing them into the black market. 

Nicotine pouches, heat not burn devices, and capped strength vapes can help adult smokers quit combustible cigarettes. 

They should be regulated, labelled, and taxed.

But, kept affordable enough to compete with contraband.

Finally, Canada must tackle the retail crime wave. 

Increased excise carries little authority when thieves can steal high-margin vape products with near impunity. 

Funding for provincial repeat offender units and better shop security rebates would protect small businesses and choke off inventory that feeds illegal online resellers.

The lessons are clear.

When prices rise far beyond the consumer’s ability or willingness to pay, the state invites a black market, loses revenue, and weakens public health control. 

Australia’s experience is not a distant curiosity; it is a cautionary tale playing out in real time. 

If Ottawa keeps jacking up nicotine taxes without addressing affordability and enforcement, it will end up chasing the same ghosts through the same smoke‑filled back alleys.

Australia lit the match. 

Canada can still stamp it out before our legal market is reduced to embers and our vape shops become easy pickings for the next smash and grab crew.