Australia: Smokers Turn to Illegal Tobacco, Costing Federal Government $1.42bn

Source from:  Herald Sun 11/16/2015

Illegal cigarettes and chop chop are flooding Melbourne's streets, with almost 15 per cent of all tobacco consumed in Australia now sold on the black market.

New figures reveal the Federal Government is missing out on $1.42 billion as smokers turn to illicit tobacco, with organised criminals cashing in.

Last week, the Herald Sun accompanied representatives from British American Tobacco as they bought ­illegal tobacco from various stores around Sunshine.

In two hours, they bought almost 2000 illegal cigarettes from eight different stores in the suburb, as well as illicit chop chop.

A new report prepared for British American Tobacco Australia, Imperial Tobacco Australia and Philip Morris Limited reveals the boom in ­illegal tobacco in Australia.

Organised criminal groups are smuggling it into the country and growing it locally before using the profits to fund other illegal activities.

The ABF has formed a strike team against the tobacco black market and seized millions of dollars worth of the contraband, but illegal cigarettes and chop chop are still easily accessible.

The Australian Crime Commission says organised criminals focus on the illicit tobacco trade because they see it as a low-risk, high-profit activity.

Chop chop now makes up 65 per cent of all illegal tobacco consumed in Australia. It is usually sold as finely cut loose leaf tobacco or in boxes of 100 pre-filled tubes with no labelling or health warnings.

"The growth in illegal ­tobacco is directly linked to the Federal Government's annual 12.5 per cent excise increases," British American Tobacco Australia spokesman Scott McIntyre said.

"These large excise increases and other excessive regulations fuel the black market and make it more lucrative for organised criminals to smuggle illegal tobacco into Australia.

"Hopefully, the ABF strike team can help stamp out the ­illegal tobacco problem as it comes across the border. However, more resources need to be deployed at the retail level for enforcement."

Retailers caught selling illegal tobacco can be fined up to $360,000, but authorities have rarely used this power.

Managing director of Philip Morris, Nikitas Theophilopoulos, said 1.6 million kg of illegal loose leaf tobacco reached the black market last year.

"It is staggering ... much of this chop chop is sold by rogue traders throughout Victoria," Mr Theophilopoulos said.

"Even more concerning is that this illegal tobacco is often processed in unsanitary conditions and may contain asbestos, rat droppings or mould. These illegal tobacco products are freely sold on the black market to anyone - including children." Enditem