Governments often turn to taxation as a lever to reduce public health risks, curb nicotine use, and generate revenue. In principle, that makes sense. But having seen Australia’s approach firsthand—as a former Australian Federal Police officer and founder of the Tobacco Strike Team—I can tell you this: when taxation goes too far, the consequences are swift, dangerous, and difficult to reverse.
What Happened in Australia: A Cautionary Tale
Australia introduced some of the world’s highest taxes on nicotine products, including alternatives like pouches and vapes. While the goal was to reduce smoking and nicotine addiction, what followed was a dramatic case of unintended consequences.
Vanishing Legal Revenue
With over 65% of the retail price of cigarettes now tied to tax, many Australians abandoned the legal market altogether. That money didn’t vanish—it simply flowed into the pockets of illicit traders. A legal 20-pack now costs around $40; you can find the same pack for $14 on the black market.
Illicit Market Surge
Despite daily smoking rates dropping from 11.6% in 2019 to 8.8% in 2023, the illicit market has exploded. Nicotine is now the second-largest illicit drug market in Australia in terms of user numbers. I’ve seen black market production span everything from unauthorized imports to dangerous homemade concoctions. None of it is regulated. All of it is risky.
Violence and Organized Crime
This is what troubles me most. Since 2023, we’ve seen over 200 arson attacks on shops and warehouses tied to illegal nicotine. Homicides, kidnappings, extortion—all tied to turf wars between organized crime groups. Well-intended policy lit the fuse for criminal growth.
The EU Should Take Note
If the EU follows a similar high-taxation model on nicotine pouches and harm-reduction products, it risks repeating these mistakes.
Black Market Growth
Price users out of the legal market, and they won’t stop using. They’ll just buy from unregulated sources—often cross-border or digital—and public health protections go out the window.
Industry Collapse and Job Losses
Overtaxing safer alternatives won’t just shrink demand—it will strangle legitimate businesses, gut supply chains, and reduce public health funding by choking off excise revenue.
Empowering Criminal Networks
High-profit, low-risk illicit trade opportunities are magnets for organized crime. Europe is already vulnerable to cross-border smuggling. Add punitive tax policy to the mix, and you’ll see an illicit nicotine boom—just like we did.
There’s a Smarter Way Forward
Based on what I’ve seen and studied, here’s what I’d urge EU leaders to consider:
✅ Moderate, Risk-Proportionate Taxation
Find the balance. Discourage excessive use, especially among youth—but don’t make safer alternatives inaccessible. Tax pouches at levels that reflect their lower risk compared to cigarettes.
✅ Consumer Education
Don’t just tax—inform. Educate consumers about the dangers of illicit products and empower them to make safer choices.
✅ Keep Products Legal but Regulated
Ensure alternatives remain available under well-enforced safety standards. Give people an on-ramp to quit combustible tobacco without pushing them into criminal markets.
Final Thoughts
Australia’s policy mistakes should be a flashing red light for EU regulators. We’ve seen the chaos that follows when taxation overshoots its mark. The result wasn’t better public health—it was black markets, violence, and billions in lost revenue.
Europe has the chance to get this right. By taking a proportionate, evidence-based approach, the EU can reduce smoking, support innovation, and keep its streets—and its citizens—safer.
Rohan Pike is a law enforcement consultant and former investigator with the Australian Federal Police and Australian Border Force. He founded Australia’s Tobacco Strike Team and advises governments globally on illicit trade prevention.
📎 Read the related UK Parliamentary submission
