Illegal Tobacco at Record Levels

Illegal Tobacco at Record Levels

Illegal tobacco use in Australia is continuing to grow with a new report revealing around one in every seven cigarettes consumed is illegal.

The latest in a series of reports by KPMG LLP in the UK, Illicit Tobacco in Australia, shows that illegal tobacco use in the last 12 months has increased from 13.5% to 14.3% of total consumption. Head of Corporate Affairs and Legal with Imperial Tobacco, Andrew Gregson, says the numbers are too large to ignore.

“Let’s put this in context – 2.5 million kilograms of tobacco, or 3.1 billion cigarettes, or more than 156 million packs of 20 were sold on the black market in one year,” Mr Gregson said.

Had that tobacco been sold legally, the Australian Government would have received an additional $1.2 billion in tobacco excise according to the report.

“Instead of paying tax to the Australian Government, criminal gangs are profiting from this illegal tobacco trade at the expense of Australian taxpayers and law-abiding retailers.”

While legal tobacco sales have declined slightly, total consumption of tobacco has remained stable due to increases in illicit consumption, the report finds.

The mix in the tobacco black market has changed since 2012. The report found that more branded illegal cigarette packs are being smuggled into Australia than ever before. Contraband cigarettes are now the largest component of the black market.

“As an industry, we congratulate law enforcement personnel for their recent successes. The problem of illegal tobacco continues to grow – so we now call on the Federal Government to direct further resources into combatting the illegal tobacco smugglers,” said Mr Gregson.

“We ask the Federal Government to take up the challenge of stamping out illegal tobacco, leading Federal and State authorities in a joint approach.

"The Government also needs to consider how ever increasing regulation - whether on cigarette packaging or tax - creates additional incentives for tobacco smugglers. It's in their best interests - and those of taxpayers - with $1.2 billion in lost revenue available."

The ‘Illicit Tobacco in Australia’ report was prepared by KPMG LLP in the UK and is an independent piece of work which gives a reliable insight into the level of illegal tobacco consumption. The OECD considers the work of KPMG the “most authoritative assessment of the level of counterfeit and contraband cigarettes” in the EU. It is a factually-based survey of illicit tobacco consumption and is not commentary on government policy. It was commissioned by BATA, Philip Morris Limited and Imperial Tobacco Australia. It highlights that:
• The illegal tobacco trade is up from 13.5% to 14.3% of total consumption in the 12 months to June 2014.
• The Australian Government and taxpayers are losing $1.2 billion in unpaid excise annually.
• Contraband cigarette consumption (imported to Australia without excise paid) is growing.
• A pack of 20 cigarettes is up to 7 times more expensive in Australia than South Korea.

ENDS

© Scoop Media