Crime gangs sense profits as the tobacco price rises

SMOKERS might be appalled by a $40 pack of cigarettes but crime gangs will be delighted as price hikes driver people on to the black market, writes Simon Illingworth.

The increased tax on cigarettes will drive the illegal tobacoo trade.

THE promised tobacco price rises, putting a pack of cigarettes as high as $40, will create an underworld turf war over the illegal “chop chop” market.

Whenever government prohibits or limits everyday “sins”, crime fills the void swiftly.

The Italian mafia, in particular, will be delighted by the tobacco announcement and the proceeds that result from these law changes will fill mafia coffers for generations. It could be worth hundreds of millions to them.

Historically, the mafia builds its empires from government-created black markets such as sly grogging, SP bookmaking and illegal gaming, to name a few. Of course, legalising pokies and Crown casino stopped the last lurk. But gangs are still around, waiting for the next opportunity. Prohibition in the US resulted in an underground, mafia-operated alcohol industry patronised by responsible citizens rejecting a law they believed was an intrusion in their lives.

Traditionally, the mafia targets laws the public feel to be unfair or unjustifiable, and exploit that to make millions. Additionally, the significant percentage of Asians who smoke tobacco, coupled with the extreme taxation levels in Australia, have already lured Asian crime gangs into the market. They are well entrenched and operating smuggling rackets now to Asians.

The current argument between the political parties about how much revenue the new smokers tax will raise is the least of their problems. The decision to raise a packet of cigarettes to $40 is ludicrous and what amounts to a prohibition for most smokers. Even at the current price ($28 a pack) organised crime gangs are smuggling tobacco enthusiastically.

So, while the cigarette tax gouge has created an underworld industry, the promised huge price hikes are a bonanza that will result in crooks tripping over themselves to get involved.

Whenever government assaults an individual’s freedom of choice, people feel disenfranchised and angry. Good or bad, the mooted cigarette laws strike at the heart of freedom of choice. Thousands of previously law-abiding (and mostly addicted) smokers are snubbing the law and buying chop chop — illegal tobacco — from organised crime suppliers. But they would never have been involved with these people before.

Chop chop is, of course, an Aussie term, given to the backdoor market of the cigarette industry. Unsurprisingly, it’s a tame, guilt-free pet name for flouting federal laws. Whenever the foundation of a law is considered shaky or overly discriminatory, its “victims” have no remorse about breaking it — and that makes such laws very difficult to police. Every smoker knows if the government really wanted to protect smokers’ health, it would ban tobacco, not tax it. Most smokers would prefer the former and go “cold turkey”. I don’t know a smoker who likes smoking; they’re addicted and feel they’re being taken advantage of.

Political parties have no idea how much revenue they’re already losing to the black market, but it’s certain that the number of Aussie smokers buying chop chop will increase rapidly in the next few years as the price rises start to bite.

An officer from the ATO excise branch with a haul of chop chop tobacco.

It’s obvious that neither the bean counters nor politicians in Canberra have factored into their predictions organised crime’s growing wedge of the industry, because no one has even mentioned it, let alone announced a significant recruitment of organised crime and mafia experts to deal with it.

Any organised crime gang not already involved in the illegal tobacco trade will be working out how to enter this incredibly lucrative market.

And I’m sorry to say this, but the new tobacco tax is the final ingredient in the recipe for another underworld turf war. Another fight over filthy lucre is coming. Murder, bashings, extortions and standover tactics will follow.

I hope I’m wrong. But I don’t think so.

Simon Illingworth is an ethics, crime and anti-corruption consultant and a former anti-corruption detective with Victoria Police