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GREATER ACTION NEEDED TO FIGHT ILLICIT TOBACCO CThe illicit tobacco trade continues to be the focus of federal and state authorities, says Imperial Brands, with increasing numbers of seizures identified across the country. ontinued excise increases in its view, suggesting illicit tobacco on tobacco products since cost the Australian community only 2010 have led to Australian $647 million in lost revenue in the 2017- consumers paying some of the 2018 financial year. highest costs in the world for cigarettes, “While authorities have had measured according to Imperial Brands. Imperial Brands Australasia Head of Corporate and Legal Affairs Kirsten Daggar-Nickson says having to pay some of the highest costs globally for cigarettes has led to the extremely lucrative black market for tobacco. “Led by crime gangs, the black market is gaining sophistication and flooding the market with illicit product,” she said. “To put it into perspective, industry intelligence suggests a shipping container filled with $200,000 worth of product from Asian markets where a pack of cigarettes is less than $5 would get a return of $7 million when sold illegally in Australia.” Recognising the extent of the growing problem in Australia, the federal government announced a suite of measures in 2018 as part of the ‘Black economy package’: combatting illicit tobacco’ to address criminal operations throughout the country. On 1 July 2018, the Illicit Tobacco Taskforce (ITTF) was established to protect Commonwealth revenue by proactively targeting, disrupting, and dismantling serious actors and organised crime syndicates dealing with illicit tobacco. The Taskforce replaced the Australian Border Force’s Tobacco Strike Team. The Taskforce, allocated $70 million a year, combines operational, investigative and intelligence capabilities of the Australian Border Force, Department of Home Affairs, Australian Criminal Intelligence Commission, Australian Transaction Reports and Analysis Centre, Commonwealth Director of Public Prosecutions, and the Australian Taxation Office. The package included the following measures: • Imposition of customs duty on imported tobacco products at the time they enter an Australian port, removing the ability of importers to defer the payment of duty by storing tobacco in licensed warehouses to deter leakage. • Creation of a multi-agency Illicit Tobacco Taskforce to enable enhanced cooperation in tackling illicit tobacco and disrupting illicit-tobacco syndicates. • Ongoing funding for the Australian Tax Office (ATO) to bolster its capabilities to detect and destroy domestically grown illicit tobacco crops, as well as an ATO excise systems upgrade (launched on 1 July). • Higher penalties to deter illegal activity relating to the production of illicit tobacco. Imperial Brands says that while the measures have led to “significant success” with the amount of illicit product being seized, more resources and funding at federal and state level are required to combat smaller retailers selling illegal products. The recently released KPMG report into illicit tobacco consumption in Australia shows one in five cigarettes is now an illegal product, ultimately costing the economy a claimed $3.4 billion in lost revenue in 2019. However, the ATO is more conservative success identifying and dismantling the operations of many criminal syndicates, the illicit trade continues to flourish,” Ms Daggar-Nickson said. “These gangs are sophisticated, operating through social media channels on the dark web, even offering refunds on orders that are seized by authorities. “This blatant and aggressive disregard for the law is being driven by demand for product, which has been exacerbated year on year as excise increases are applied to the cost of tobacco in Australia. “Governments must address the elephant in the room and acknowledge the illicit consumption continues to grow while smoking rates continue to flat-line. Further excise increases will only drive demand higher, giving criminal gangs an even greater foothold on the market. “Those wanting to quit currently don’t have legal access to vaping products in Australia, the only Westernised democracy yet to regulate vaping as an effective means to quit or reduce smoking. “We know millions of people around the world with access to vaping products have quit smoking and regained their health. If the government is serious about supporting people to stop smoking and to reduce the criminal element driving the black market for tobacco, it must regulate vaping now. “Federal Health Minister Greg Hunt should now be very aware vapers in Australia won’t accept the proposed ban on importing liquid nicotine without a medical prescription. The outcry after his announcement to introduce the ban on 1 July came not only from vapers and harm reduction advocates, but also members of his own party, who were angry at the lack of consultation with the party room. “If the ban goes ahead, there’s significant risk that illicit, unregulated and unsafe vape products will be the next issue the government needs to address.” TOBACCO “Led by crime gangs, the black market is gaining sophistication and flooding the market with illicit product.” OCT, 2020 RETAIL WORLD