KELLY O''DWYER SYDNEY DOORSTOP
A tobacco taskforce will be set up in this year's budget to crack down on the illicit trade and raise $3.6 billion in revenue.
Tuesday's budget will include new powers for the tax office to charge duties and a requirement to obtain a permit to import tobacco.
It will also work to close down illegal tobacco crops known as "chop chop".
Financial Services Minister Kelly O'Dwyer is responsible for setting up the taskforce - led by the Australian Border Force - to enforce the changes across other agencies.
"We know that the illegal tobacco market is dominated by criminal syndicates and these criminal syndicates use the funds they gain through illegal tobacco to fund their other illegal activities," she told reporters in Sydney on Sunday.
"The government wants to shut down these illegal criminal syndicates."
The coalition believes the measures will generate $3.6 billion in revenue.
Finance Minister Mathias Cormann is confident they can raise that much.
"Based on all of the advice and all of the information in front of us that is the additional revenue number over a four year period," he told Sky News.
The changes follow the 2016 budget announcement of an annual 12.5 per cent rise in tobacco excise.
The government says it has seized an estimated 98 tonnes of illicit tobacco this financial year alone.
Had it been sold legally it's expected to have netted the taxpayer almost $90 million in revenue.