The Department of Immigration and Border Protection only issued 24 fines for illegal tobacco smuggling in the last five years. NSW Police
Misa Han
August 27, 2017
AFR
Tobacco smugglers are not paying for their crimes, receiving a median fine of just $17,000 while largely being allowed to keep the proceeds.
The Department of Immigration and Border Protection said in answers to the parliamentary committee on illicit tobacco, seen by The Australian Financial Review, that the department only issued 24 fines for illegal tobacco smuggling and excise evasion since 2012.
Other than one individual who was issued a $7.9 million fine for multiple counts, most smugglers received only a small fine, with the amount ranging from $500 to $70,000. The median fine for tobacco smuggling and tax evasion was only $17,000. This is far below the maximum $210,000 penalty for a single count of tobacco smuggling.
The document also shows the department has not seized any profits from illicit tobacco under the federal proceeds of crime laws in the last five years.
The department said penalties for offences were “a matter decided by the court in line with the penalties stated within the legislation”. The department said it had seized some cash but it is unclear whether this used proceeds of crime legislation.
“The ABF continues to pursue joint operations with the AFP and proceeds of crime offences are pursued through our partnership with the AFP. As a result of Tobacco Strike Team operations the AFP has restrained cash, which has subsequently been forfeited under the proceeds of crime act, however we cannot provide further detail for operational reasons,” the department said.
The Financial Review reported last week illegal tobacco shops with criminal links avoid more than $4 billion a year in excise taxes.
The department’s own figures show since October 2015, the tobacco strike team seized 225 tonnes of illicit tobacco, which represents $174 million in evaded revenue.
Records show the border protection department has been more successful in sending tobacco smugglers to jail as oposed to extracting fines. The department said since 2012, 26 individuals have been imprisoned for tobacco offences, with prison sentences ranging from three months to three years.
The department said Border Force’s tobacco strike team achieved “record results”, with more than 100 people charged and 45 people successfully prosecuted in the past two years.
Worth the risk
In his submission to the parliamentary inquiry into illicit tobacco, former leader of Border Force’s tobacco strike team Rohan Pike said the illicit tobacco market is “flourishing” due to a range of influences, including the “low risk/high reward crime environment” that has been created by progressive tax rises.
KPMG’s latest report on tobacco consumption, commissioned by tobacco companies, estimates in the past 10 years legal tobacco consumption decreased by nearly 20 per cent to 14.2 million kilograms, while the illegal tobacco consumption increased by over 40 per cent to 2.3 million kilograms.
Jeff Rogut, chief executive of convenience store industry body Australasian Association of Convenience Stores, said the department’s data shows the lack of action being taken by the government to crack down on illegal tobacco. More than a third of convenience store sales comes from legal tobacco sales.
“There have only been 24 fines imposed in five years, that’s less than five a year. It’s absolutely ludicrous,” he said.
He said although there are hefty fines available to law enforcement agencies, nobody is enforcing the penalties, which provides financial incentive for illegal tobacco retailers.
“The profit margins on selling illegal tobacco are far greater than honest retailers selling legitimate tobacco, so it’s worth the risk particularly if people know they are not going to be prosecuted [for selling illegal tobacco].”
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