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Retailers warn of declining sales and a potential budget hole as expensive tobacco products drive buyers towards contraband sales and vaping.
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Taskforce seizes $28m in illegally grown tobacco
12 April 2023
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A joint operation between the ATO, NSW Police Force and Australian Border Force has seized 16 tonnes of illicit tobacco with a potential excise value of more than $28 million.
ATO assistant commissioner Justin Clarke said illicit tobacco was being grown by organised crime syndicates to circumvent the tax system.
“These operations are not run by genuine farmers or landowners, but by criminals living and operating in local communities,” said Mr Clarke.
“Evading excise duty on tobacco costs the community millions of dollars that could be spent on essential community services.”
The haul comes as supermarket and petrol station bosses warn that the federal government could face a $5 billion budget deficit due to declining tobacco sales.
The Australian reported independent supermarkets, petrol stations and convenience stores were seeing shoppers switch to illicit tobacco and shun regular products due to escalating prices.
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The CEO of Ritchies Supermarkets, Fred Harrison, said his chain was down $1.2 million a week in tobacco sales compared to two years ago.
“The federal government is probably missing out on around $4 billion in excise tax, they are so slow to react,” Mr Harrison told The Australian.
“People are switching to chop-chop, contraband tobacco and vaping instead of paying $50 for a packet of cigarettes.”
Mr Clarke said the trade held other dangers, too.
“Criminals who deal in illicit tobacco pose a serious threat to the Australian community. They use their profits to fund their lifestyles and engage in criminal behaviour well beyond the sale of illicit tobacco,” he said.
The commander of Operation Phobetor – the joint agency team behind the raid – detective superintendent Stuart Cadden, said the sizable seizure would impact the shadow economy and the illicit activity it funds.
“The seizure of this tobacco has resulted in the disruption of the syndicate’s supply chain, which in turn means the profits aren’t funnelled into organised crime,” said Det Supt Cadden.
“Tobacco is simply one source of income that organised criminals use to fund their other illicit activities.”
“The NSW Police Force, the AFP, the ACIC (Australian Criminal Intelligence Commission), and all our other partner agencies will continue to conduct operations targeting illicit activities. Collaborative efforts are necessary to target any criminal activity which brings potential harm to our community.”
ABF superintendent Sasha Barclay said criminal organisations were growing their own crops because the force had been effective in disrupting illegal imports.
“What we’re seeing is more and more criminal syndicates are trying their hand at cultivation to keep up supply as ABF continues to increase the amount of illicit tobacco being detected and seized at the border,” said Superintendent Barclay.
“These criminal syndicates are sophisticated and run like a business, so they will do whatever it takes to ensure they have a supply and continue to bring in a profit at the expense of legitimate business owners and the wider Australian community.”
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