A coalition-led inquiry into illegal tobacco in Australia recommends pausing increases to taxes on cigarettes and tobacco products in order to throttle the illicit trade, but the government has rubbished the move.
The inquiry's report also recommended laws similar to New Zealand to establish the legalised sale of regulated nicotine vapes and other products.
Tobacco taxes were a key focus of the inquiry, with some witnesses advocating for a return to 2019 levels or a cut of about 40 per cent.
The excise adds about $1.50 to the cost of every cigarette and nearly $2500 per kilogram of tobacco content, according to the Australian Taxation Office, with another indexation increase in a matter of days.
Rohan Pike, a former Australian Border Force officer who created the ABF's Tobacco Strike Team, said the report offered sensible recommendations to stamp out organised crime.
"The report is overwhelmingly positive," he told AAP.
"It's disappointing to see Labor's dissenting report which acknowledges adverse consequences of the current policy, but refuses to do anything about them, supporting the status quo instead of action to fix the problem."
Labor has dismissed the report and the inquiry as a "stunt" by the Liberals.
"This was not a serious attempt by the coalition to engage with the issue," Labor senators Jana Stewart and Dorinda Cox said.
They said the illicit tobacco trade was a serious issue "already exploding" when the Liberals lost office in 2022, noting the donations the opposition received from tobacco companies.
"The coalition's goal is to benefit Big Tobacco and those with a vested interest in flogging more nicotine to Australians."
Mr Pike said the government was ignoring the criminal consequences by viewing the tobacco issue solely through a health lens.
Labor accusing the coalition of doing the bidding of the tobacco industry was a bit rich, he said.
"The exact same thing could be said of Labor's support of organised crime. All their policies are Christmas presents for organised crime and that simply has to stop."
Inquiry chair and Liberal senator Leah Blyth said the once-successful national tobacco control strategy was facing a breaking point.
"In this new context, Australia's suite of tobacco control measures must be urgently re-evaluated to make them fit for purpose," Senator Blyth said in the report.
An estimated 80 per cent of all tobacco consumed in 2025 was illicit, up from 12 per cent in 2017, according to the Australian Bureau of Statistics.
The Labor senators referred to disputed data from the Australian Institute of Health and Welfare which shows smoking rates are falling.
But they did not mention ABS data that shows the quantity of nicotine consumed in Australia increased almost 40 per cent in eight years.
Labor has stood its ground in refusing calls to cut the tax on legal tobacco, including from NSW Labor premier Chris Minns, in order to kill off the illegal trade
A similar argument has been put forward by the coalition and One Nation.
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