Retail Bodies Renew Call for Greater Enforcement Against Illegal Tobacco as Report Shows Illegal Trade Still at 14%

[CANBERRA] – 20 June 2019 – A coalition of Australia’s largest retailers has today renewed calls for greater enforcement against illegal tobacco, after a new report showed illicit trade represented more than 14 per cent of the total tobacco market.

The new report, authored by KPMG LLP, showed that in the last year 2.1 million kg of tobacco was purchased illegally in Australia.

The Australasian Association of Convenience Stores (AACS), the Australian Lottery and Newsagents Association (ALNA), the Australian Retailers’ Association (ARA), Master Grocers Australia (MGA) and Ritchies Stores have come together to highlight the urgent need for state and federal law enforcement agencies to focus on how to crack down on illicit tobacco at the retail level.

The report comes after eight people were detained and deported for bringing in 177,063 undeclared cigarettes at Melbourne Airport. A raid weeks later in Sydney uncovered an organised crime syndicate that allegedly imported more than $9 million of illicit tobacco.

Jeff Rogut, CEO of AACS, said: “It is a worrying trend that year after year, illicit tobacco makes up such a large percentage of the market.

“While the federal government has made substantive efforts to ensure a comprehensive set of offences aimed at stopping the importation of illicit tobacco, we’re not seeing this enforced at retail level to rein in and punish the perpetrators of this damaging black market.

“Hundreds of legitimate retailers across the country, many of them small businesses doing the right thing by abiding by the law, are losing thousands of dollars every week to sellers of illicit tobacco. This activity is illegal, and should be made an example of,” Mr Rogut said.

The CEO of ALNA, Ben Kearney, said “Federal efforts to curb this significant illicit trade have been welcome, but much more needs to be done by all enforcement agencies both state and federal to stop this illegal trade at a retail level and to protect legitimate retailers from the risks that come with this trade.

“It unfairly impacts many of our retailers’ businesses and their staff who work incredibly hard to do the right thing when selling this highly regulated product and it completely undermines those strict regulations.”

“The latest report shows the importation and sale of illegal tobacco is getting out of control, and more needs to be done to enforce the strict laws around combating this crime. It is worrying that so many retailers are getting away with breaking the law and potentially putting consumers in danger, as they are supplying products of unknown origin and ingredients to people of any age,” said Jos de Bruin, Chief Executive Officer of Master Grocers Australia.

The Executive Director of the Australian Retailers’ Association, Russell Zimmerman, said that ongoing increases in tobacco excise that far outpaced inflation appeared to be having the unintended consequence of fuelling the trade in illicit tobacco.

“With big increases in tobacco taxes in recent years, it seems obvious government efforts to tax smoking out of existence are at least a factor driving the illegal tobacco trade,” he said.

Fred Harrison, CEO of Ritchies Stores said: “It is alarming to see that 14 per cent of all tobacco sold in Australia is illegal. This causes a number of challenges for retailers around the country who are trying to do the right thing but are forced to compete with customers having a cheap, unregulated version on the black market.”

“We need governments and authorities to step in and address an issue that is costing the economy more than $2 billion a year.”

/Public Release. View in full here.