Black Market Tobacco Now 14.5 Per Cent of All Consumption, New Report Shows

Source from:  Herald Sun 05/05/2015

THE tobacco black market is now costing taxpayers more than $1 billion as smokers baulk at the price of legal cigarettes and smugglers cash in.

Last year, 14.5 per cent of all tobacco smoked, nearly 2.6 million kilograms of it, was illegal, KPMG's Illicit Tobacco in Australia 2014 reported.

According to the report, commissioned by the world's biggest tobacco companies, the size of the tobacco black market has increased by 30 per cent since 2013 and now costs the Federal Government $1.35 billion in lost taxes.

The black market boomed during a period when the Government increased tobacco -excise taxes by 25 per cent.

Australians now pay among the highest prices for legal -cigarettes in the Asia-Pacific, about seven times more than smokers in countries such as China or South Korea.

John Gledhill, managing director of Philip Morris Limited, warned: "The Government's excessive tobacco regulations are providing incentives for the black market.

"As cigarette smuggling continues to grow in Australia, the Government must enforce the law and prosecute people caught selling illicit tobacco," the tobacco giant boss said.

Customs said tobacco smuggling was a priority.

Since last July it had found illicit tobacco in sea cargo 61 times.

The total amount was 91.5 tonnes of loose tobacco and $21.4 million of cigarettes.

Three people had been jailed in two successful cases.

The biggest factor in the growth of the illicit tobacco black market was said to be the increase in the consumption of "chop chop", or unbranded loose-leaf tobacco.

Chop chop is sold in 250g to 500g amounts or in boxes of 100 rolled tubes without any labelling or health warnings.

A packet of illegal cigarettes is about $10 cheaper than a legal product, according to the KPMG report.

Retailers can be fined up to $340,000 for selling tobacco products that breach plain packaging laws.

But as yet the Department of Health has not prosecuted anyone for such a breach.