The island state, which already has some of the world's strictest anti-smoking laws, is considering banning tobacco altogether, reports the Independent.
The proposal was put forward by councillors in Burnie, in north-western Tasmania, in response to a discussion paper by the state government, which wants to reduce the smoking rate, one of Australia's highest.
Smokers in Tasmania are becoming increasingly marginalised: the state capital, Hobart, banned cigarettes from the city centre four months ago, and the second-biggest city, Launceston, recently decided to do the same.
Other councils are considering following suit, and there are also calls for smoking to be prohibited on the island's beaches.
Civil libertarians have denounced the idea and even health experts question the wisdom of such a drastic step.
But Burnie is standing its ground.
"We just wanted to take that extra step; to show how passionate we are about creating a healthy environment," one local official said.