Australia: Tobacco Black Market at Record Levels

Source from:  9News 03/04/2016

Big tobacco companies have blamed annual increases in the excise on cigarettes for fuelling the black market to record levels, a parliamentary inquiry has been told.

That's because Australia had the most expensive cigarettes in the world.

Nearly 15 per cent of all tobacco consumed in Australia was illegal with the majority of it smuggled into the country from Asia and the Middle East, British American Tobacco Australia spokesman Steve Rush said on Friday.

That represented $1.42 billion in lost revenue for the government and taxpayers each year.

That money went to organised crime which smuggles products across the border at an estimated street value of $2 billion, Mr Rush said.

"This is a large and growing problem and more needs to be done," he said.

BAT outlined five steps the government could take to significantly address the issue:

* A more measured approach to tax increases.

* More resources for the Australian Border Force tobacco strike team.

* Move enforcement of plain packaging laws at the retail level from the health department to the ABF.

* Increase minimum sentences for tobacco smugglers.

* Courts to have the option to impose jail sentences and fines to those convicted under the Excise Act.

Mr Rush described annual increases in the tobacco excise as "disproportionately large", noting it had increased 100 per cent since 2010.

"Australia is now the most expensive market in the world to buy cigarettes," he told the inquiry.

A packet of cigarettes could be purchased for 50 cents in source markets and smuggled into Australia and sold for around $12 - half the average pack price of legal products.

Increasing the excise was only fuelling the black market.

Mr Rush warned that some countries in Europe and Asia had illegal tobacco rates in the 20 to 30 per cent range.

"We clearly don't want to get to that, so the time to act is now." Enditem