Cheap Cigarettes Available Over the Internet

For Australians, there’s never been a better time to give up smoking.

With the Labor Party promising to increase the tobacco excise by 12.5% each year, smokers could be paying around $40 a pack by 2020 if Labor is elected in July.

There’s also speculation that the Turnbull Government could hike cigarette prices as early as next month, after plans to address the budget shortfall through an increased GST or removal of negative gearing benefits fell through.

At present, Australians are paying amongst the highest prices for cigarettes in the world. As of 2010, Australia was ranked third globally, just behind Ireland and Norway, in terms of the average price of a packet.

However, some brands are still selling packets the of cheapest cigarettes for around $16. Anti-tobacco advocacy group, Quit Victoria, has criticised certain supermarket chains for importing cheap tobacco from the Ukraine to sell at discount prices. The organisation’s director, Dr Sarah White, told Fairfax media:

“Any measure that is trying to make cigarettes cheaper for people to keep them hooked on an addictive product that kills two out three long-term smokers is reprehensible… The cigarette companies are not doing this make money, they’re doing this to keep people hooked on their toxic product.”

Both major parties argue that increasing cigarette prices is important for ensuring less Australians take up the habit, and more give it up – and Mr Turnbull foreshadows higher tobacco excises to help fund private health insurance rebates.

Importing Cheap Cigarettes

With the average cost of smoking now nearly $8000 a year, even the cheapest Australian cigarettes are unaffordable to many.

But some smokers have found a loophole – using the internet to order packs for as little as $5 a pop. Some overseas websites promise to discreetly send cheap cigarettes, made in Asia or Eastern Europe, gift wrapping them to help circumvent inspections by customs.

Although the number of duty-free cigarettes that Australian’s can bring back from overseas was cut in 2012 from 200 to 50 sticks, there’s currently no restriction on importing above that amount by mail. Imported cigarettes are supposed to attract $0.54 in duty per stick – if they’re detected by Australian customs, that is. That works out to about $10.75 a pack.

But overseas websites are encouraging the practice of avoiding excise duty. One such site assures prospective customers that “only around 20% of Australian orders were asked to pay tax when their parcel arrived in Australia” and “Cigarettes are held in customs until the duty is paid, or destroyed if it’s not.”

Avoiding Excise Duty

Section 234 of the Customs Act makes it an offence to evade payment of any duty which is payable upon an imported product. The section prohibits:

• intentionally making (or causing to be made) a statement to an officer, reckless as to the fact that the statement is false or misleading in a material particular;

• intentionally omitting (or causing to be omitted) from a statement made to an officer any matter or thing, reckless as to the fact that without the matter or thing the statement is misleading in a material particular;

• intentionally giving information to another person, knowing that the information is false or misleading in a material particular and that the other person or someone else will include the information in a statement to an officer; and

• intentionally giving information to another person, knowing that the information is misleading in a material particular because of the omission of other information that the person has and that the other person or someone else will include the information in a statement to an officer.

However, the section does not specifically prohibit the importation of goods which are subject to duty, which means anyone can legally buy such items over the internet provided they do not engage in the above types of misleading conduct.

Under-the-Counter Sales

There are stiff penalties for anyone who goes on to sell imported cigarettes ‘under-the-counter’. For example, retailers can be fined up to $340,000 for selling tobacco products that breach plain packaging laws, but the Department of Health has not prosecuted anyone for the offence as yet.

Despite the threat of a fine and criminal record, the selling of illegally imported cigarettes is now estimated to make up a whopping 14.5 per cent of cigarette sales in Australia.

Naeun Kim, a journalist at Vice, wrote about the ease of purchasing illicit cigarettes in Sydney:

“I stepped into the nearest Chinese convenience store, a hole-in-the-wall type shop, and asked for a pack of Dunhills. After a small hesitation, the guy said yes…The pack cost me $16. He quickly grabbed my money and handed over the cigarettes.”

The Argument Against Cigarette Tax

Australia’s astronomical tobacco tax is a driving reason behind the boom in demand for cheap imported cigarettes. Ms Kim says the price of a pack purchased ‘under-the-counter’ works out to be able $10 cheaper – or around $3500 cheaper per year for the average smoker.

While the tax has contributed to a fall in smoking, some are concerned that  increases disproportionately affect habitual users who are on low incomes, which can in turn affect their families.

Senator Ricky Muir told he Seven Network that he thinks “it’s at the point now where raising the price of cigarettes is proven not really to stop the diehard smokers who have been doing it for a long time.’

That group, he says, would end up paying a disproportionate amount of their income on the new tax.

Each year, smoking is estimated to kill around 15,000 Australians, and costs the nation around $31.5 billion, according to the Department of Health. The question is – who should pay for this?

If you’re a smoker, QuitNow offers support for those who want to break the habit