Excise and plain packs blamed for illegal trade rise

A record level of illicit tobacco consumption last year has caused the Australian government to suffer an estimated tax ‘loss’ of $1.35 billion, according to a story by Roman Kennedy for The Australian, citing a report by KPMG.

The report, prepared for Philip Morris, British American Tobacco Australia and Imperial Tobacco Australia, indicated that illicit tobacco products represented 14.5 percent of total consumption in 2014.

KPMG estimates that if this quantity of tobacco products had been consumed instead in the form of licit products, the government would have earned an additional A$1.35 billion.

Phillip Morris managing director John Gledhill was quoted as saying that the growth in illicit tobacco consumption came during a period that saw two 12.5 percent tobacco excise increases and the implementation of standardized tobacco packaging in December 2012.

Two further 12.5 percent tobacco tax increases are planned for this year and next.

The story said that most of the illicit cigarettes consumed in Australia came from China and South Korea.