A network of shops on the Gold Coast is selling black market tobacco as part of a nationwide racket which authorities say is largely organised by crime syndicates
A NETWORK of shops on the Gold Coast is selling black market tobacco as part of a nationwide racket largely organised by crime syndicates, politicians and authorities say.
And it is costing taxpayers about $1bn a year.
A Bulletin investigation identified eight outlets where illegal tobacco is allegedly being sold. None of the shops have a presence online or advertise their products, but have a steady stream of customers.
Fifteen customers entered one shop in 10 minutes shortly after noon on a weekday. Many of those customers emerged carrying products wrapped in white plastic bags.
Sources say the bags contained “chop chop” (illegal tobacco) which is being sold for as little as $69 for 100 grams.
By comparison, 100g of Rothmans Blue, Gold or Red costs $213.95 from online retailers. The majority of that cost is federal government revenue.
“I’m paying 87 per cent tax,” one retailer told the Bulletin.
“These boys are selling 100g for $69 in a white shopping bag because it’s not in plain packaging, so they’re breaking all the packaging laws. Why would you not shop there?”
A customer leaving a shop on the Gold Coast alleged to be selling illegal tobacco products with a white plastic bag.
A customer leaving a shop on the Gold Coast alleged to be selling illegal tobacco products with purchase wrapped in a white plastic bag.
Sources say shops selling illicit tobacco remain one step ahead of authorities by keeping only a limited supply on the premises. The bulk of stock is kept in nearby vehicles that can be driven away at short notice.
Legitimate retailers paying full taxes and observing government rules say they are being driven out of business by the cut-price operators.
One told the Bulletin he was down “thousands of dollars a week” in takings.
Australian Association of Convenience Stores chief executive Theo Foukkare said unscrupulous operators were exploiting “gaps” in tobacco retailing laws, with responsibility for enforcement debated by state and federal agencies.
“These stores are taking advantage of the fact that currently nobody is coming after them and they’re making a lot of money in the process,” Mr Foukkare said.
“Estimates suggest one in six cigarettes sold in Australia is an illegal product.
“It is a big problem (for legitimate retailers).”
Mr Foukkare said existing legislation was not fit for purpose when it comes to deterring operators from selling illegal tobacco.
“What we need is a licensing scheme introduced to separate the legitimate and illegal operators,” he said.
“And for those stores doing the wrong thing, it needs to be as easy as possible for police to go in, search the shop, seize any illegal tobacco products found and hand over a big, on-the-spot fine, like $20,000.
“It needs to be easy for police and the fines need to be big because we know they just bring new stock in after a raid and carry on.
“Police need to be able to go back the next day with another fine and the next day until it’s no longer profitable to run the shop.
“In the meantime, the proceeds from those fines could probably help fund the crackdown.”
Tobacco products found by Queensland Police in the car of a man trying to cross the border from NSW. The man allegedly $600,000 worth of illegal tobacco in his vehicle. Picture: Queensland Police
In June, Queensland police arrested five people after a two-year investigation into illegal trading in the Logan and South Brisbane districts.
As part of Operation Romeo Serge, which involved Queensland Police, Queensland Health and the Australian Taxation Office (ATO), 12 search warrants were executed at addresses in Beenleigh, Springwood, Slacks Creek, Rochedale South, Logan Central, Marsden, Waterford and Heritage Park.
Police seized 4.5 tonnes of tobacco, $900,000 in cash, 114,732 packets of cigarettes and 150,000 vapes containing nicotine.
However, to date there have been no such operations on the Gold Coast and there have been no successful prosecutions of any Gold Coast retailers in relation to illegal tobacco trading.
An ATO spokesperson told the Bulletin the federal government was estimated to be losing almost $1bn a year due to illegal tobacco trading.
The spokesperson also said much of the activity was funded by organised crime syndicates.
“The 2019-20 tax gap estimates the tax not paid as a result of the illicit tobacco market to be approximately $909m – this includes locally grown tobacco and tobacco imported illegally,” the spokesperson said.
“Tobacco-growing operations are not run by small producers or farmers, they are run by organised crime syndicates who deliberately engage in illegal activities.
“… Retailers who choose to become involved in the sale of illegal tobacco gain an unfair price advantage over honest businesses who are doing the right thing.
“Removing illicit tobacco from crop to shop creates a level playing field and also helps to stop organised crime syndicates from funding other activities.”
McPherson MP and Federal Minister for Home Affairs Karen Andrews. Picture: Liam Kidston.
Federal MP for McPherson Karen Andrews, who is also minister for Home Affairs, said she had been made aware of allegations of illegal tobacco sales in Gold Coast shops.
Ms Andrews said her office had passed the allegations to relevant authorities.
“Any reports of illicit tobacco are a concern and should be taken seriously,” she said.
“Illicit tobacco is often used to test smuggling routes, it denies the community legitimate tax revenue and it undercuts the small businesses who are doing the right thing.
“People consuming these products don’t know what they’re getting – illegal cigarettes have been found to contain some pretty foul substances.”
Ms Andrews said the Australian Border Force had recently seized a large number of illegal tobacco products.
“The (federal) government is cracking down and the Border Force is getting good results at our border,” she said.
“I was recently at a Border Force facility in Brisbane, where I personally saw 10 million illegal cigarettes seized from a shipment coming from the Middle East.”
GOVERNMENTS ‘MUST ENFORCE RULES’
Cancer Council Queensland’s general manager of advocacy James Farrell said he was concerned by reports that cut-price tobacco was being sold on the Gold Coast.
Mr Farrell said that in 2017, 366 people were diagnosed with lung cancer on the Coast. Smoking was a leading cause.
“People who are diagnosed with lung cancer, less than a quarter of them will still be alive after five years,” he said.
“Not all lung cancer is caused by smoking but it’s a massive risk factor.
“… We know that price is an important consideration when people are thinking about starting smoking or thinking about quitting.
“That’s one of the important reasons why government imposes excise on tobacco products. It’s not just a revenue-raising exercise.”
Mr Farrell urged authorities to take action when there were allegations of tobacco trading that evaded government rules.
“It’s important not only that we have the right laws and policies, but that governments are enforcing them,” he said.
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