ILLICIT TOBACCO AT CRISIS POINT: AUTHORITIES PASS THE BUCK AS CRIMINALS CONTINUE TO COLLECT

June 15, 2017: Illegal cigarettes with branded logos, tax-free and with no quality control standards, are being sold with impunity in local markets across Australia to anyone, potentially even minors, costing the Australian Government over $1.6 billion in lost tax revenue each year and costing responsible retailers of legal tobacco products millions in lost legitimate sales. 
Yet no-one – not the police, the ACCC, Border Force, the Department of Health or local councils – is willing to put their hand up to tackle this crime.
It’s not just the suburban weekend market where illicit tobacco is openly sold. It’s out the backs of cars, from some shopfronts and in supermarket parking lots.
KPMG[1] estimates just under 14% of all tobacco consumed in 2016 Australia was illegal.
It has reached crisis point. And honest retailers of legal tobacco whose businesses are suffering are fearing for their lives. They’re afraid to speak up for fear of violent retribution at the hands of the criminal gangs responsible for flooding the market with illegal products.
So the Australasian Association of Convenience Stores (AACS) is asking on their behalf: who is responsible for policing the distribution and sale of illicit tobacco?

Illicit tobacco purchased in June 2017 from a Melbourne market open to families and children
As it stands, retailers caught selling tobacco products with obsolete graphic health warnings or in non-plain packs face fines that run into the hundreds of thousands of dollars.
Officials are routinely dispatched to catch out retailers possibly selling tobacco products to underage children in sting operations.
As for the crime of illicit tobacco flourishing under their nose at street level? Nothing appears to be done.
The AACS has consistently reinforced the major impact the trade of illicit tobacco has on responsible retailers of legal tobacco products.
“The illicit trade of tobacco has an enormous impact on responsible retailers of legal tobacco who play by the rules. The regulatory environment for tobacco has seen Australia become one of the world’s most lucrative markets for illicit cigarettes. But more than just economic impacts, illicit tobacco has emerged as a huge public safety issue,” AACS CEO Jeff Rogut said.
“Violent robberies targeting cigarettes are a regular occurrence amongst responsible retailers. High prices of legal tobacco, artificially imposed as a result of excessive government taxes, are putting people’s lives in danger.
“Then there are the burdens of higher insurance costs and additional security needs – costs again that must be borne by retailers.
“The need for a genuine response to illicit tobacco crimes is a matter of urgency. Government must issue a clear directive so the responsible authority is aware of the extent of this illegal activity and its role in tracking down these criminals and bringing them to justice. Border Force do a great job with major seizures, however smaller sellers still seem to be flourishing in neighbourhoods.
“In the meantime, we ask the Australian Government to review its policies and impose a moratorium on future tobacco excise increases so the situation can be brought under control.
“It is unacceptable that a person can walk into their local community market, choose from a range of illegal tobacco products on display, including loose tobacco, and make a purchase without paying the tax a legal tobacco product would attract, while the people selling these products have no fear of being penalised,” Mr Rogut said.
Research summary: Public opinions on illicit tobacco
In 2016, the AACS commissioned independent research to investigate the level of public awareness, as well as attitudes and opinions, on the illicit tobacco market in Australia.
A total of 4,000 Australian consumers aged 18 years and over (and eligible to vote in State/Territory and Federal elections) were interviewed in late August / early September 2016, using a combination of online and telephone interviews.
The survey and subsequent independent research report was undertaken and compiled by the Sexton Marketing Group.
Executive summary

• The research shows that the biggest single consumer concern regarding illicit tobacco is that it is a revenue-earner for organised crime, who use that revenue to expand their criminal activities, including into socially damaging areas like ice production and distribution.

• Consumer awareness of the extent of the illicit tobacco trade is generally low.

• Most consumers would be concerned if politicians turned a blind eye to this issue, or worse still, did not adequately resource Customs to stop the trade at its source.

• There is also strong support for tougher penalties for illegal tobacco trafficking and unscrupulous retailers selling illegal tobacco products.

• There is also concern that Government revenue is being lost, putting pressure on budgets for hospitals, schools, etc.

Consumers want non-compliant retailers punished
Unsurprisingly, the research shows that consumers are strongly in favour of penalising unscrupulous retailers which sell illicit tobacco. Authorisation A91550 is focused specifically on tougher penalties in line with public opinion on this issue.
A summary of the key findings of the AACS research into public opinions on the illicit trade of tobacco is included overleaf.

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
[1] Illicit Tobacco in Australia 2016, KPMG, May 2017