ABS estimates 80pc of tobacco consumed in Australia last year was illegally sourced

The illegal tobacco market has flourished. (ABC News: Grace Burmas)

An estimated 80 per cent of the cigarettes and vapes consumed in Australia last year were illegal, according to the ABS.

Treasury downgraded tobacco excise revenue by $8 billion over the next five years in the latest federal budget.

Criminologists say the findings highlight a "massive policy failure and require a radical rethink" of tobacco laws.

An estimated 80 per cent of the cigarettes and other nicotine products consumed in Australia last year were illegal, according to the Bureau of Statistics, which has analysed the "rapid growth" of the black market for the first time.

Data released by the ABS today found nicotine consumption increased by almost 40 per cent between 2017 and 2025, while household spending on legal tobacco products fell dramatically over the same period.

After an arranged marriage to tobacco baron Sam Albion, Kawther Salih says the relationship spiralled into an abusive situation that saw her subjugated into working in the underground tobacco industry.

"The increase was underpinned by a large rise in illicit cigarettes as well as increases in e-cigarettes and other nicotine products," the ABS analysis found.

"Consumption from illicit sources, as a share of total tobacco consumed, rose from 12 per cent in 2017 to 80 per cent in 2025."

The experimental estimates are based on "nicotine metabolite concentrations" detected in wastewater samples, combined with data showing a collapse in household spending on legal cigarettes and vapes.

In its analysis, the ABS points out prices for legal tobacco have almost tripled since 2016, driven by steep increases in the excise, which experts blame for creating a black market that has spiralled out of control.

"These numbers put it in the most stark terms possible," said James Martin, a Deakin University criminologist who described the findings as "absolutely staggering".

"This is a massive policy failure and requires a radical rethink.

"It's simply not possible to enforce your way out of a mess of this size."

Australia has among the highest cigarette prices in the world, with the tax alone increasing by more than 200 per cent in the past decade.

Illegal cigarettes can sell for about $25 a pack. (Supplied: Australian Border Force)

The excise is now worth $1.52 per stick (more than 80 per cent of the total cost), pushing the price of a packet of 25 cigarettes well over the $50 mark.

Under-the-counter cigarettes sell for around $25 a pack and are being imported in huge quantities, mainly from Asia and the Middle East.