AACS: GOVERNMENT POLICY MAKES AUSTRALIA A HAVEN FOR ILLICIT TOBACCO

May 3, 2018: The 2017 numbers are in and the enormity of the illicit tobacco market operating in Australian communities has been laid bare. And for Government, there’s another reason to be concerned, as nearly $2 billion in excise revenue went uncollected over the course of the year.
According to the Illicit Tobacco in Australia 2017 Full Year Report produced by KPMG LLP, the proportion of illicit tobacco consumption rose from 14.3% of total tobacco consumption in 2016 to 15% in 2017.
This latest spike in black market activity cost the Government a staggering $1.91 billion in excise that would have otherwise been collected from legal tobacco sales last year.
Australasian Association of Convenience Stores (AACS) CEO Jeff Rogut says the regulatory environment governing legal tobacco sales has fuelled a black market that has spiralled out of Government’s control.

Illicit tobacco purchased in June 2017 from a Melbourne market open to families and children
“Regular excise increases on legal tobacco have positioned Australia as one of the world’s most lucrative markets for criminal gangs involved in the distribution of black market tobacco throughout the community, including to minors,” Mr Rogut says.
“The KPMG report spells it out in straightforward terms. 15% of tobacco consumed in Australia last year was sourced from illegal sources and sold by criminals.
“Illicit tobacco has major ramifications for small businesses, robbing them of legal tobacco sales, and is also a major public safety issue.
“Financially, more than just the impact of lost sales, convenience stores face higher costs in terms of insurance and security. We’re all familiar with the increased incidence of violent robberies committed against convenience store workers and cigarettes are almost always a target of these thieves,” Mr Rogut says.
Mr Rogut has renewed calls for Government at all levels to adopt a coordinated strategy to target organised crime. Reviewing legal tobacco retail policy is also needed, he says.
“We believe the time has come for Government to impose a moratorium on future tobacco excise increases until actual inroads to crack down on the illicit tobacco market in Australia are made. This would also reduce the potential of violent robberies which put people’s lives at risk,” Mr Rogut says.
“There are other avenues Government can investigate to fight back against black market tobacco criminals. For instance, by making alternative products such as eCigarettes more readily available, we can offer people a choice to help them quit, and potentially shift the focus from traditional tobacco products.
“The longer eCigarettes are unable to be legally sold, the more likely the black market will fill this gap too, and there are already illicit eCigarette products circulating in the community.
“It would also be helpful for the health lobby to recognise the impacts of illicit tobacco, including the lack of quality control standards and the fact criminal gangs have no problem selling their products to minors. This is much more than just a retail issue, so we encourage the health lobby to lend its voice and help stem this societal problem,” he says.
A summary of AACS research into public opinions on the illicit trade of tobacco is included below. 
Further information:             
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores
Ph: +61 467 873 789
Media enquiries:
Stephen Naylor
Wise McBaron Communication
Ph: +61 (2) 9279 4770
AACS RESEARCH: PUBLIC ATTITUDES TOWARDS ILLICIT TOBACCO
A survey commissioned by the AACS and completed in September 2016 shows that: The biggest single consumer concern is that it is a revenue-earner for organized crime, who use that revenue to expand their criminal activities, including into socially damaging areas like ice production and distribution.
A total of 4,000 Australian consumers aged 18+ years (and eligible to vote in State/Territory and Federal elections) were interviewed using a combination of online and telephone interviews.
A summary of the key findings is included overleaf.
THE VIEW OF CONSUMERS: PUBLIC OPINIONS ON ILLICIT TOBACCO