Australia - illicit tobacco, do what's right increase the tobacco tax..

July 8, 2009 - The federal government is being urged to slash smoking rates by 9 percent over the next decade. Increasing the cost of tobacco products is one of the most effective ways to reduce the smoking rate, especially among consumer groups sensitive to price, such as young people.

It seems when a possible increase in the price of tobacco products are considered there's always those that bring up that this will result in the importation of illegal tobacco more profitable, potentially enticing new players into what is already a booming criminal market.

We say bring it on - that's why Australia has customs service national manager for investigations like Richard Janeczko to slow the flow of illicit tobacco products into the country. (Related news brief: Australia - illegal cigarettes readily available..)

Mr Janeczko's comments came in the wake of a discussion paper by the Preventative Health Taskforce, titled "Making Smoking History," and aimed at cutting the number of smokers from 17 per cent of the population, or three million people, to 9 per cent. (Australia - More on federal tobacco tax increase..)

The government is reportedly considering progressively increasing the price of cigarettes to $20 for a packet of 30. The proposal has been enthusiastically endorsed by the health industry, which argues that disadvantaged groups are more likely to drop the habit if the price goes up.

Mr Janeczko said an increase in tobacco tax would effectively increase the return made by smugglers, whose profit derived from dodging the excise. Mr Janeczko warned that, with greater profits to be made, there was a possibility of more illegal shipments from both existing criminal gangs as well as new entrants attracted by the high returns.

Mr Janeczko said the illegal importation of tobacco was a major issue for Customs.
According to figures supplied by Customs, there were 11 detections of illicit tobacco products between January and March. They included 65 tonnes of tobacco leaf and 22 million cigarettes. Last year, there were 40 detections of illicit tobacco products comprising 111 tonnes of tobacco leaf and 62million cigarettes. The year before, a total of 284 tonnes of tobacco leaf and 94 million cigarettes were seized.
All told, the illegal importations represented $185 million in tax evasion, not including GST.

Mr Janeczko has previously said the market for illegal tobacco is beginning to rival the illicit drug market. There have also been reports from overseas law enforcement agencies linking the proceeds of tobacco smuggling to terror funding. Last year, Mr Janeczko said it was believed the Lebanese crime groups responsible for tobacco importation and distribution in Australia had links to Middle East terror groups.

Reference: Tobacco tax 'boosts smuggler profits' by Paul Maley, The Australian, 7/8/2009.