Australian Taxation Office Discovers AUD 18.5m of Illegal Tobacco in Two Raids

May 01, 2019

Illicit tobacco trade is a major problem across the world but is particularly acute in certain regions and countries. For example, in Australia, a KPMG study that tracked the dynamics of the legal and illegal tobacco markets over the years found out that illegal consumption was up 15 percent from 2017 while legal consumption declined. Another study, conducted by Oxford Economics, found that tax losses in Australia caused by illegal tobacco represent around 50 percent of the total tax losses in 2017 registered in the Asia Oceania region. 

Last week, Australian officials made a huge step forward, seizing large quantities of illegal tobacco of a total potential excise value of more than AUS$18.5 million across New South Wales and Victoria. The raids were carried out by the Australian Taxation Office (ATO), with support from state police forces from both areas. In all, almost 34 acres of tobacco crops and more than 16 tons of leaves were seized and destroyed.

Following the raids, ATO assistant commissioner Peter Vujanic said: “Engaging in the illicit tobacco trade is not victimless. It significantly deprives the community of taxes that are required to fund essential community services such as roads, school and hospitals.”

According to Vujanic, the illicit tobacco trade—both from illegal tobacco growing and illegal import of tobacco products—is worth about AUS $600 million a year in evaded revenue. Nevertheless, the successful seizures demonstrate the ATO’s capability to detect and reduce organized crime syndicates in tobacco trade.

The Australian Border Force announced in March of this year that it had dismantled a smuggling ring in Sydney that had in its possession almost three tons of loose-leaf tobacco, more than 300,000 cigarettes and close to AUS $100,000 in cash.

In an interview with Stop Illegal last year, head of the Australian Association of Convenience Stores (AACS) Jeff Rogut said that the black market in tobacco in the country had “blossomed” in recent years. He estimated that it could account for three times the official estimates—almost half of total sales in the country. Tobacco accounts for 38 percent of sales for convenience stories in the country, according to the AACS, and the organization has been pressing for more concerted efforts to clamp down on illicit trade. 

It is illegal to grow tobacco in Australia without an appropriate excise licence. But that’s almost academic, as there have been no licenced tobacco growers or manufacturers in Australia since 2006.


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Written by STOP: ILLEGAL

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