The former AFP officer says normally law-abiding citizens from lower socio-economic backgrounds have been pushed into buying cheap imported “chop chop” because they can’t afford Australia’s “exorbitant tobacco excise, which is now the highest on tobacco in the world”.
“Criminal syndicates are preying on this addiction by smuggling cheap tobacco, largely from Indonesia, Malaysia and China, over our borders, selling it on the streets and in stores for sometimes half the cost of legal tobacco,” he said.
“The largest portion of foreign manufactured illegal tobacco comes from China who contribute 25 per cent of all illegal tobacco imports.”
The ABF seized more than 177 tonnes of loose-leaf tobacco and 422 million cigarettes in the 2019/20 financial year, with the duty evaded totalling some $611 million.
Mr Pike said increased cigarette prices had also generated a corresponding increase in criminals stealing cigarettes, which have become “as expensive as silver”, to sell on the booming black market.
A series of robberies across Victorian service stations in recent months have targeted cigarettes, which are likely sold on the black market, with Mr Pike saying more robberies will happen as cigarettes rise in price.
He said halting the rise in cigarette prices was “one of the obvious measures” the government could take to curb the black market and slow thefts.
“The government are just increasing the profit that criminals can make,” he said.
Cigarette prices have increased five-fold in the past two decades, with some packs of 25 costing about $45.
For the eighth consecutive year, the tax on tobacco will increase by 12.5 per cent in September. The tax is aimed at reducing smoking rates, which have halved since 1995 and are at their lowest rates in history.
In this time, the black market for illegal tobacco – imported mainly from Asia and the Middle East – has grown, with the ATO estimating about $650 million in potential tobacco excise revenue was lost in 2017-18, about 5 per cent of what was collected through tax that year.
Mr Pike said laws needed to change to allow state police authorities to proactively target illegal tobacco shops, which are often disguised as gift shops.
He said smokers who felt the price of cigarettes had become “unfair” were able to justify their decision to enter the illicit market.
“Their decision is $35 per packet or $10 per packet … [so] it starts pushing even law-abiding citizen break the law,” said Mr Pike.
“And because there’s no enforcement at a retail level – people are selling it willy nilly with no risk of enforcement action – the option for people to buy the illegal stuff is readily available.”
But Simon Chapman, respected tobacco control activist and health academic, said claims of a booming black market were overblown.
He said tobacco industry estimates placed the illegal market at about 15 per cent of the total market, and cited National Drug Strategy Household Survey data suggesting the figure was about 2-3 per cent of the total market.
Mr Chapman said the only way to discourage smoking was to keep increasing the price of cigarettes to rise at a quicker pace than other goods and services.
“If the [government] were to do anything to halt that, or reduce the cost of cigarettes, the effect would be for more people to smoke,” he said.
Aja Styles is a senior writer for WAtoday.
Paul is a Victorian political reporter for The Age.