Illegal Tobacco Costs $100m

Source from:  smh.com.au March 3, 2006 03/03/2006

NEARLY one-tenth of Australia's tobacco crop is grown by crime syndicates and funneled to the black market, where it is often sold tax-free. A report yesterday by the Auditor-General, Ian McPhee, said as many as 290,000 smokers buy the contraband product, saving about two-thirds on the price and costing the Government about $100 million in lost taxes. Smokers of illegal tobacco often "believe it is 'natural', unadulterated and therefore less harmful". Instead, the "chop chop" tobacco is frequently wet and cut with twigs, cotton pulp, hay, cabbage leaves, grass clippings and a "dense volume of fungal contamination". The National Audit Office report into excise collections cites figures showing up to 5 per cent of smokers consume illegal tobacco. About 347,000 tonnes of illegal tobacco was grown last financial year, worth about $100 million in lost excise. Pouch tobacco is taxed at $285 a kilogram. The illegal crop has expanded 43 per cent in three years and is now almost a tenth the size of the legal crop, at 3.5 million tonnes. Enditem