Exorbitant Tobacco Taxes Lead to Organised Crime and Endanger the Public

The recent seizure of $35 million dollars in tobacco plants in Victoria is just the latest incident in the burgeoning black market tobacco trade in Australia – a trade that has sprung from increasingly exorbitant tobacco taxes and negatively affected Australia in a number of ways – from the importation and sale of unregulated tobacco products, to the growth of organised criminal groups regulating their sale through what the media has dubbed ‘the tobacco wars’. 

Latest Seizure

The VIPER Taskforce, Australian Border Force, and Australian Taxation Office worked together to locate, seize and destroy over 16 tonnes of tobacco during a search warrant at a five-hectare property in Merrigum, a small town 200 kilometres north of Melbourne.  

The discovery of the tobacco crops was made possible by the vigilance of community members who provided crucial information to the police. This underscores the important role that each of us can play in combating organised crime and ensuring public safety.  

Authorities have estimated that organised crime groups are in charge of 75% of the illegal tobacco trade within the country — an astonishing figure that brings into light the question of the safety of the public when it comes to the illicit tobacco industry.  

Despite the push to continually inflate tobacco taxes with a view to reducing harm to society, it seems there has merely been a shift in the type of harm.  

Perhaps the most significant negative consequence of heavily taxing tobacco is the growth of organised criminal groups who coordinate the importation of black market tobacco products and regulate their sale – resulting in what the media has recently dubbed as ‘the tobacco wars’ and the violent crime and arson attacks that have come with it. 

So perhaps it’s timely to ask whether the taxation and regulation of tobacco products is unjustifiably harsh and, if so, should be relaxed? less.  

Negative Consequences of Exorbitant Tobacco Taxes

The adverse consequences of current taxes and regulation are varied, and include: 

Black Market

The tobacco black market in Australia is not shrinking due to the strict legislation – it is growing. In Victoria alone, more than 1,000 tobacco stores sell illicit tobacco or related products — a whopping 77% out of all the stores that sell tobacco products. High cigarette prices, a reduction in smoking rates, and relaxed law enforcement and legislation have all led to a massive increase in the country’s black market that has led to organised crime and a billion-dollar industry that is lucrative for criminals.  

Importing cigarettes and tobacco products isn’t just used for consumption by the general public. The importation of illegal products is used for bartering in criminal activity, such as conversion into other types of drugs, weapons, or other items.  

Stricter Licensing for Stores

Victoria has already started making tobacco retailers obtain a special license to fight a deadly turf war that has seen hundreds of businesses in the state attacked and firebombed. Despite the initial push to help businesses avoid violence and remaining a cog in the machine of the illegal tobacco trade, this means that innocent businesses will have to “jump through hoops” and “pass a strict test” to get a license.  

Therefore, Victorian businesses must comply with new police regulations that allow them to search their store, suspend licenses, seize items, and issue penalties. The same could be implemented in NSW as the state attempts to crack down on tobacconists selling illegal products.  

Tobacco Wars

The Australian media has deemed the fighting between organised crime groups within the country as the ‘tobacco wars’, with the illegal sale of tobacco and resulting violent criminal offences perpetrated by organised criminal groups on an alarming rise. Criminal networks have been fighting one another for the majority of control in the illegal tobacco trade, driven by the incentive of the exorbitant price of legal cigarettes and tobacco-related products in the country.  

In South Australia alone, there have been nearly 20 businesses and vehicles attacked in relation to the sale of illicit tobacco. Despite the SA Police making 16 arrests through raids and searches, the number of crime syndicates, criminal networks, and attacks has increased in the state and Australia (with firebombings a huge indicator of the corrupt tobacco shops in Victoria back in 2023).  

Not only is the presence of organised crime a threat to multiple state’s police forces, but it is a direct danger to the general public. Crime groups carry out arson attacks, fights, and extortion against their enemies — and innocent members of the public, such as store owners – leading to questions about whether the police, and the country, can stop or slow down the ever-growing illicit trade network.   

Lower Government Revenue

Very high tobacco taxes not only threaten the organisation of criminal groups and the general welfare, but it puts the economy at risk. Increasing tobacco taxes will lead to a decrease in government revenue due to lower sales of legal tobacco products across the country, leading to taxation issues and reliance on illegal substances.  

The total receipts for tobacco products in the 2022-2023 financial year were $0.2 billion lower than initially thought. This shows how avoiding tax payments and reliance on illegally sold tobacco negatively affects the government’s revenue. The trends indicate that expenditure estimates continue to decline in recent years, with expenditure going from $44 billin in 1990 to $17.2 billion in 2018.  

Is More Legislation and Enforcement The Answer?

The general public and state lawmakers must be wondering: What is the most efficient way to curb organised crime and avoid the deadly tobacco wars? Are more tobacco offences and increased penalties and regulations the answer? Maybe not. 

Black-market tobacco products are all over the country, threatening not only the health of Australian citizens but also the public safety of innocent people. Organised crime and the fight for cheap tobacco products have led to an increase in property destruction, arson, and injuries related to the black market, which can harm innocent people along the way.  

Enforcement could be the answer to cracking down on the criminals involved in the syndicates running the show—but up until now, the responsibility of enforcement has been shirked to local councils and consumer affairs. These small agencies and governmental bodies don’t have the resources or personnel to combat an ever-growing black market with billions of dollars successfully.  

In this case, the real way to slow down or stop the tobacco black market could fall to the health minister and the government. Stopping the increasing tobacco taxes would mean the legal price of tobacco would freeze or possibly drop, thereby starving the black market and making tobacco easier to get without the need for illegal activity.