Cutting duty-free cigs no deterrent: BATA

One of the world's biggest tobacco products makers says dropping the duty-free cigarette allowance for travellers arriving in Australia won't deter smokers.

British American Tobacco Australia (BATA) says the federal government would be financially better off by focussing on stamping out illegal tobacco sales by organised crime gangs, which costs up to $1.1 billion a year in revenue.

The federal government is believed to be planning to remove the duty-free exemptions that apply to tobacco sales at Australia's airports for in-bound travellers.

The move could deliver the government up to $300 million a year in extra revenue from tobacco products excises.

But BATA says travellers will buy their tobacco in other countries to avoid the 70 per cent excise upon return.

"Financially it's a no brainer," BATA spokesman Scott McIntyre said on Tuesday in a statement.

"Rather than targeting the hip pocket of Australian and international tourists, the government could remove a large income source from organised crime gangs."

At present, the tax-free allowance for in-bound travellers over 18 years is 250 cigarettes, or 250g of tobacco product.