New move to smash crims’ $5b illicit tobacco honeypot

Police will get more money to throw at Australia’s out of control illicit tobacco market, which has fuelled firebombings and daylight executions.

Exclusive: Dodgy smoke dealers’ cash will be seized in a crackdown on Australia’s out-of-control illicit tobacco trade which has been fuelled by surging cigarette taxes.

Police will be given extra resources to restrain the alleged ill-gotten gains from the nation’s $5 billion addiction to cut-price black masrket cigarettes.

Health Minister Mark Butler is doubling down on the Labor Government’s tobacco policy, pouring an additional $156.7 million into enforcement.

Mr Butler will detail the plan on Wednesday, in a joint announcement on behalf of Home Affairs Minister Tony Burke and Treasurer Jim Chalmers.

The move comes after convenience store owners this week pleaded with Mr Chalmers to freeze excise tax, which now costs smokers $1.40 per cigarette.

Sam Abdulrahim, known as the Punisher, was a player in the illicit tobacco market. He was executed in January. Picture: Jason Edwards

However, the Labor Government is refusing to give in to criminals profiting from illegal cigarettes, saying long term smokers die 10 years earlier than non smokers.

“We’re cracking down on illicit tobacco and we’re putting the people profiting from black market tobacco on notice,” Mr Butler said.

“The Albanese Labor Government will provide $156.7 million to help tackle the tobacco black market.

“This substantial investment will give law enforcement agencies the funds they need to take the fight to criminals.”

A tobacco shop fire bombing at Aqua Gardens shopping centre in Sydenham. Saturday, August 24. 2024. Picture: David Crosling

Almost $50 million of the new funding, on top of $188.5 million announced in January, will be allocated to the Australian Federal Police-led Criminal Assets Confiscation Taskforce.

“This additional, significant funding is focused on breaking the business model of criminal networks by dismantling their business capabilities and confiscating illicitly-gained assets and monies,” Mr Butler said.

And the funding includes $40 million to help state authorities to regulate the black market.

The enforcement push comes as organised crime groups based off shore continue to evade police.

Health Minister Mark Butler.

Treasurer Jim Chalmers.

Industry analysis revealed there were 3,137 shops selling illicit tobacco across Australia, often as Manchester and Double Happiness branded packets.

The cigarettes are made by legitimate manufacturers in Dubai and China, who are not involved in any wrongdoing.

The products only become illegal when they are mislabelled to avoid Australia taxes.

Illegal cigarettes, which avoid excise tax, sell for around $14 a packet, compared with as much as $57 a pack from a convenience store.

Criminal groups can land Manchester and Double Happiness cigarettes in Australia for as little as 50 cents a packet, with one container load worth as much as $10 million in profit.

Australian Border Force has seized millions of Manchester branded illegal cigarettes. Picture: Supplied

The Federal Budget has lost $2.7 billion in revenue a year as 414,000 smokers have turned to illicit tobacco, according to the Australian Criminal Intelligence Commission.

That figure was likely to increase when the Federal Budget was handed down on March 25.

Mr Butler was due to make the announcement on the crackdown in Melbourne, which has been the scene of more than 130 illicit tobacco shops firebombings since March 2023 and the daylight execution on Sam “the Punisher” Abdulrahim in January.

ACIC chief executive Heather Cook said last month that organised crime groups were increasingly moving into the illicit tobacco market because it was “perceived as lower risk” than importing drugs such as cocaine, ice and heroin.

Taxes on cigarettes soared as part of Labor’s 2012 Plain Packaging laws, which forced tobacco companies to replace pack branding with graphic images of serious ill smokers.

Originally published as New move to smash crims’ $5b illicit tobacco honeypot