Pic Herald Sun

No matter how much they duck and weave and ignore the problem, there is only one entity to blame for the Tobacco Wars: the Government.

The tobacco black market has grown due to the increase in excise and other taxes on tobacco products, taking the price of a pack of cigarettes from $10 for the popular Winfield Blues in 2005 to around $47 a packet and $469 per carton by 2023.

A carton of cigarettes will last most smokers a bit over a week if they are lucky.

And with the annual excise locked in at 12% per annum, a carton of cigarettes will be over $500 per carton in 2024.

Smoking may be socially unacceptable, and a smoking environment is not too pleasant for non-smokers. Still, it is not criminal, and in these economic times, smokers are forced to access their smokes on the black market for purely financial reasons exacerbated by the current cost of living.

This strategy by the Government to tax people out of using tobacco has forced otherwise law-abiding citizens into fringe criminality, and who knows once the smokers become entwined in the criminal sphere what that will lead to.

Whatever that is, you can guarantee the criminals will exploit it.

Domination of this market will reap billions of dollars for the criminal gangs. Therefore, the motivation to control the market is enormous, hence the firebombings.

Black market cigarettes sell for around $20 per pack and are illegally imported into Australia by the container load.

The profit on just one container load is about $13 million.

The Herald Sun set out the case that describes this illicit trade from an unidentified source on April 3, 2024.

Tobacco industry analysis puts the ultimate retail value of a 40-foot container of smoke products at between $7m and $13m, more than double the worth of eight years ago.

The same load of contraband can be bought overseas for about $250,000, meaning there is potential for a 50-fold return on investment.

This has generated fierce competition for a lucrative market with other advantages for the tobacco racketeers.

Disposal of the product is far easier than for big shipments of narcotics like cocaine and methylamphetamine, where buyers are at risk of long prison terms.

“It’s always easier to get people to buy tobacco,” the source said.

Given these figures, is there any wonder that organised crime would move in on this lucrative cash cow?

And the cow that gives keeps on giving, as the subsequent rise annually in excise is set at 12%, pushing the retail value of an illegal container load to $14.5 Million and a pack of cigarettes close to $80, driving more smokers to the black market.

The extraordinary profits from this illegal trade have driven organised gangs to try to dominate this lucrative market. When they do, and without competition, they will push the price of the illicit products.

Given smokers are now prepared to pay $70-$80 per packet for legal cigarettes, the illicit cost, without competition, will also rise so the black-market smokes could reach $50-$60 per packet, raising the profits for the criminal gangs to numbers with a ‘B’ in front, the equivalent of the National debt.

The government has already had to adjust the Budget figures to reflect the reality of the loss of projected excise, but it seems caught in the ‘headlights’ of what to do about it.

The answer is pretty simple: it is in the numbers.

The massive cost of attempting to stop the importation at the border and the vast cost of policing the fallout of lawlessness and the growth of criminal gangs could be slashed tomorrow if the excise was removed without fanfare and pre-warning to the criminals.

The efforts to stop this issue at the border have failed, and simply increasing the resources there would be a ‘fool’s folly.’ A reinvigorated ‘Quit’ campaign could be aimed at the ‘Black Market’ that will ultimately lead to higher tax revenues once the hiatus designed to destroy the illegal trade, is completed.

An inquiry that may take a year or more could recommend a sustainable tax regime without restarting the illicit trade. This would encourage smokers to return to lawful retailers and give the government the financial boost they crave from taxation.

Catching criminals with vast stocks of illicit products would be somewhat prophetic, as it would hit them where they feel the most pain: in their hip pocket.

They will be forced to lower their prices to a degree where it is uneconomical to continue to import illegal tobacco products.

If the wars continue unabated and given the ethos (greed) of criminal gangs, the problem will escalate, and then the chances of somebody being killed would nearly be inevitable.