An analysis of the Australian illicit tobacco market
| Pages | 35-47 |
| Date | 03 January 2017 |
| Published date | 03 January 2017 |
| DOI | https://doi.org/10.1108/JFC-10-2015-0056 |
| Author | Mark Lauchs,Rebecca Keane |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
An analysis of the Australian
illicit tobacco market
Mark Lauchs and Rebecca Keane
School of Justice, Queensland University of Technology, Brisbane, Australia
Abstract
Purpose –This paper aims to provide an overview of the illicit tobacco market in Australia. It attempts to
build a picture of the sources of demand, size of the market and methods of supply.
Design/methodology/approach –This paper is based on collation of disparate government reports,
industry research, media and court documents. It is a preliminary paper in the absence of better source data.
Findings –The market is driven by the extremely high tax on tobacco in Australia. Australia’s geography
emphasises on large shipments from overseas rather than small-scale smuggling. The likely market is for
migrant communities with much higher smoker rates than in the mainstream community.
Research limitations/implications –It is not yet possible to conduct a well-focused research because
of limited ofcial documentation.
Practical implications –Few government agencies focus on tobacco smuggling, and there are no
publications providing a strategic picture of the illicit market. This paper lls this gap by collating multiple
sources to produce a market prole.
Social implications –The Australian Government loses $1bn per year in tobacco tax because of
smuggling. The illicit supply also means that the social goal of the tax, namely, dissuading tobacco
consumption, is undermined.
Originality/value –There are no academic or government publications describing the Australian illicit
tobacco market. The only publications are based on research funded by the tobacco industry, which has a
vested interest in overstating the size of the illicit market.
Keywords Tax avoidance, Organised crime, Tobacco smuggling
Paper type Research paper
Introduction
With prices for legal tobacco expected to be AUD$25 a packet by 2016, Australia will soon be
home to the world’s most expensive tobacco (KPMG, 2015). Illicit marketplaces have long
existed throughout the world and thrive or falter based on the actions of surrounding
governments. Just as outlawing a product can create demand, increasing prices on legal
products can also stimulate a black market. The decision by the Australian Government to
inate the price of tobacco beyond the reach of most consumers is being capitalised upon by
international organised crime syndicates, seeking the high protability of this market (ACC,
2012). The public health initiatives of this policy produce positive health outcomes; however,
little attention is being given to the expanding black market, which may also be propping up
global arms trade (ACC, 2012), illicit drug production (AFP, 2013) and terrorism (Coker, 2003;
Rawley and Centre for International Maritime Security, 2014). These links have been
investigated and conrmed by multiple Australian law enforcement agencies and regulatory
bodies with the Australian Crime Commission (ACC) (2013),The Australian Federal Police
(AFP) (2013),The Australian Customs and Border Protection Service (ACBPS) (2015a,
2015b) and The Australian Taxation Ofce (ATO) (2015a), all releasing statements
regarding illicit tobacco smuggling and its presence in the country.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Australian
illicit tobacco
market
35
Journalof Financial Crime
Vol.24 No. 1, 2017
pp.35-47
©Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-10-2015-0056
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