The federal government is facing its lowest tobacco excise revenue in many years, as illegal cigarette sales explode.

Health and financial experts say Australia is caught in a vicious cycle as people turn to illicit, cheaper sources - undermining public health goals and draining government coffers.

Tobacco excise revenue in 2025–26 is expected to be about $7.4 billion, down sharply from $12.6 billion in 2022–23 and from a peak of $16.3 billion in 2019–20.

At the same time, the value of illicit tobacco entering Australia - whether seized or making it to market without detection - is estimated by the Australian Taxation Office to have exceeded $6 billion in 2022–23.

Doctors say the nation is now facing smoking levels not seen in more than a decade, pointing the finger squarely at the flo

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