Excise duties are taxes levied on specific goods like tobacco, alcohol, and petrol. These goods have few substitutes and inelastic demand, so they become a lucrative revenue source for the government, with GST then levied on top, forming a tax on a tax. A common excuse is that these things are bad for your health or the environment, leading to the label of ‘sin taxes’. Governments can then arbitrarily increase these taxes and get little pushback.
A 2026 ‘Mapping the World's Prices’ report by Deutsche Bank compares cost-of-living data in 69 cities across six continents, and reveals that Australia's steep ‘sin taxes’ have made Melbourne and Sydney the most expensive cities in the world for beers and cigarettes.
Libertarians believe that if a good isn’t illegal and doesn’t harm anyone else, it should not be taxed more highly than other goods. Moralising should not become an excuse for revenue raising.
These taxes have significant unintended consequences. When a good that people desire is prohibited or made prohibitively expensive, black markets thrive. Since black markets are by definition outside the law, this gives a lucrative market to organised crime gangs, leading to an increase in other forms of crime including violent crime.
This has become obvious in the case of tobacco, where sky high excise rates have become a form of quasi-prohibition. This approach has failed to impact smoking rates but has generated mega-profits for organised crime, leading to a deadly tobacco war involving murders and arson attacks. Criminals also have no qualms about selling to children. The best way to undermine organised crime is to remove the source of their profits by cutting tobacco excise tax, allowing legitimate law-abiding sellers to compete.
Vaping is likely to be significantly less harmful than smoking, and in jurisdictions like New Zealand where vaping has been embraced, smoking rates have fallen much faster than in Australia. The Australian government has tried to limit the sale of vaping products to pharmacies, but very few pharmacies have agreed to supply these products, making it another form of quasi-prohibition. This prohibition of vaping just gives yet another lucrative market to criminals.
When it comes to alcohol taxes, arbitrary price differences between alcoholic beverages are created from contrasting tax systems: volumetric excise duty for beer and spirits based on alcohol content, and the Wine Equalisation Tax for wine based on its selling price alone. These systems heavily penalize high-alcohol spirits while advantaging cheap bulk wine. Like in the tobacco industry, the government is using the ‘sin tax’ justification to fleece consumers while favouring certain businesses.
Fuel excise is a flat tax levied on petrol, diesel, and other petroleum products, currently 52.6 cents per litre. Popular mythology holds that this revenue is collected to fund the roads, but in practise it simply goes into general revenue. Meanwhile, electric vehicles contribute nothing toward road maintenance, despite being heavier vehicles which impact the roads even more.
The ability to get in a car and drive, with your own portable fuel source, is central to individual freedom, and should not be made artificially expensive. Eliminating fuel excise will lead to lower cost pressures on food, consumer goods, industrial production, and everything that is transported, unleashing an economic boom. Eliminating aviation fuel excise will have the same effect on air travel and transport.
The Luxury Car Tax was introduced in 2000 as a domestic industry protection measure against imported cars. Now that there are no Australian car manufacturers, it has lost its original purpose. There is also no ‘sin tax’ justification. It is simply a 33% additional tax on the GST inclusive price of a vehicle over the threshold, currently around $80,000 for standard vehicles. The government should leave our cars alone.
The Libertarian Party will:
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Abolish tobacco excise. This will get to the root of organised crime by allowing a legitimate tobacco market to return.
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Legalise vaping and the sale of vaping products as retail consumer products for adults, with similar protections for minors as tobacco products. This will take another product out of the hands of criminals, and offer another option for people who want to quit smoking.
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Abolish alcohol taxes, to create an even playing field for beverage types.
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Abolish fuel and aviation fuel excise, thereby lowering the cost of travel and transport for all goods.
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Abolish the luxury car tax, allowing Australian motorists to choose a vehicle that best suits their needs.