One Nation leader Pauline Hanson has proposed cutting Australia’s tobacco tax by 75 per cent, arguing cheaper legal cigarettes could help reduce the country’s growing black market.

The proposal would cut almost $30 from the tax on a packet of cigarettes and include a three-year pause on further indexation.

Hanson said high tobacco taxes have helped fuel an illicit market now worth billions of dollars.

“It has handed a multi-billion-dollar market to organised crime while excise revenue collapses,” she wrote on social media.

“Cut the tax. Smash the black market. Cut off the cash for organised crime.”

One Nation MP Barnaby Joyce also backed a reduction, arguing the high cost of legal cigarettes was encouraging the illegal trade.

“If you keep on putting up the price of cigarettes, you are going to get more mafia,” he said.

“The only way we can deal with the criminality … is to bring back the price of legal cigarettes into the same realm as where the illegal ones are.”

The proposal comes as authorities grapple with a significant increase in illicit tobacco sales and associated organised crime.

Australia’s tobacco commissioner estimated in December that at least half of the tobacco consumed in Australia was being sourced from the black market, generating more than $4 billion in profits.

Tax revenue from tobacco has also fallen sharply, with an estimated $7.7 billion to $11.8 billion in revenue lost during the past financial year.

However, the proposal has faced opposition.

Nationals Senator Matt Canavan said he supported an excise cut, but questioned whether One Nation had properly calculated the costs.

“I think the question has to go to One Nation: How much is going to cost? Have you done that work? How are you going to balance the budget?” he told News24.

“You’ve got to get these sorts of things right. What we are doing is going through a very considered process as a Senate inquiry right now into this issue; I know we’re conducting a lot of costings and consultation with people about what should be done.”

The Australian Medical Association has also rejected the idea that cutting tobacco taxes would solve the illicit trade.

“The illegal trade persists even in countries with much cheaper cigarettes, including in countries like Vietnam, the Philippines and Senegal where tobacco is very cheap,” AMA president Danielle McMullen said last year.

“There’s absolutely no evidence to support the idea that reducing excise will impact illegal tobacco.”

The federal government has also ruled out cutting tobacco excise, instead focusing on enforcement and disrupting organised crime networks.

Treasurer Jim Chalmers said the government was not considering the proposal.

“The government’s focus is on the compliance side; [an excise cut] is not something we are proposing,” he said.

“The government’s focus is on law and order, compliance, and more than $350 million in extra resources.

“[There have been] some recent successes when it comes to cracking down on illicit tobacco, but we still have a lot of work to do. It is still a very substantial challenge.”

Australia has progressively increased tobacco excise since 2010 as part of efforts to reduce smoking rates, alongside measures including plain packaging.

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