Chickens coming home to roost

The chickens have come home to roost in Australia. After spending years dismissing the warning that banning cigarette branding and setting tobacco duty at ludicrous levels would lead to a surge in black market activity, politicians down under are having to face the music.

Recent months have seen stories like this:

Old Erowal Bay man charged over alleged tobacco smuggling

A 32-year-old Old Erowal Bay man has become the fifth individual to be arrested as part of an extensive Australian Border Force (ABF) investigation into a tobacco smuggling syndicate in Sydney.

... On June 8, ABF officers intercepted a container originating from Malaysia declared as boxes of paper cups, however officers will allege the boxes contained more than 4.5 million cigarettes.

And this...

Australian tobacco executive bashed and stabbed in attempted kidnap

The attempted kidnapping, bashing and stabbing of an international tobacco company manager outside his family home in Sydney suggests crime syndicates are hitting back at efforts to combat the booming illicit tobacco trade.

The attack appears to be an unprecedented escalation in the struggle between policing agencies and the syndicates driving the illicit tobacco trade. Evidence suggests the attack was linked to BAT's support of police inquiries.

Police and big tobacco companies believe the illegal trade is driven by the escalating cost of legal cigarettes, and is now worth more than $1 billion. Budget measures mean a legal pack of cigarettes will cost $40 by 2020, compared with as little as $10 for a smuggled packet.

The bashed BAT manager had been working closely with state and federal agencies investigating the illicit trade, which is a huge source of income for organised crime syndicates in Melbourne and Sydney.

And this...

The Australian Border Force (ABF) has reported that in its first two years of operations it has stopped more than 400 tonnes of illicit tobacco from reaching the black market in Australia.

The ABF estimated the total duty evaded on the illicit tobacco at more than $294 million.

In the same period it said more than 100 individuals had been charged with tobacco smuggling.

Assistant Commissioner at the ABF, Wayne Buchhorn pointed to the recent arrest of two Chinese nationals following the detection of more than 7.4 million cigarettes at the Sydney Container Examination Facility.

The pair had allegedly attempted to conceal the cigarettes inside table tops.

Mr Buchhorn said illicit tobacco could be sold at more than 60 times its offshore price.

“Illicit tobacco is an increasingly attractive market to organised criminal syndicates due to the lucrative profits that can be made in evaded tax,” Mr Buchhorn said.

 And, indeed, this...

An Australian Border Force official has been nabbed over an alleged international tobacco ring operating between Sydney and Dubai.

... The arrests follow dawn raids on Tuesday when more than 570 AFP officers swooped on homes and businesses across Sydney.

"Unfortunately, during this operation, we have uncovered some allegations of corrupt activity, which this syndicate exploited to try and get their drugs into the country," AFP Assistant Commissioner Neil Gaughan said on Thursday. 

...this...

Tobacco smuggling ring busted in Sydney

Five men face serious criminal charges over their alleged roles in a tobacco smuggling ring after NSW Police seized 6.2 million cigarettes.

...this...

Illegal $9m tobacco crop destroyed in Vic

The destruction of a $9 million illegal tobacco crop in rural Victoria shows illicit growers they can't hide from the law, the Australian Taxation Office says.

The five-hectare crop was found at a property near Cobram on the NSW border in Victoria's north last week and subsequently destroyed.

The five tonne crop of tobacco leaves had an estimated street value of $9 million.

... It was the fourth operation of its kind this year and the ninth in Australia since last July, with almost $48 million worth of tobacco destroyed in that time.

...this...

Man charged after police find 4.8 million illegal cigarettes in Melbourne warehouse

A man has been charged with possessing 4.8 million illegally imported cigarettes with a street value of $2.5 million.

Australian Border Force (ABF) officers raided a warehouse at Dandenong, in outer south-east Melbourne on Wednesday, after receiving information from the Australian Criminal Intelligence Commission.

ABF said they found more than 4.8 million cigarettes hidden among glass bottles, with a street value of $2.5 million.

...this...

Australian Border Force smash Adelaide, Melbourne tobacco smuggling syndicate

A SOUTH Australian woman has been arrested for allegedly importing more than nine tonnes of illicit tobacco into Melbourne and Adelaide.

...this...

ATO seizes illegal tobacco crop worth $5.8m

An illegal tobacco crop with a potential excise value of $5.8 million has been seized from a central Victorian property.

Fifteen acres of tobacco plants were seized at a property in Macorna, between Durham Ox and Kerang, following an ongoing investigation into illegally grown tobacco.

And this...

Australian Tax Office helps police uncover illegal tobacco crop worth over $11m near ACT border 

An illegal tobacco crop worth more than $11 million has been discovered during a search by police and tax office officials of a property just south of the ACT border.

As many as 92,000 tobacco plants and two tonnes of tobacco leaves, along with $15,000 in cash, a shotgun and ammunition, were discovered during the joint operation yesterday morning, after a tip of from a member of the public.

I could go on, but you get the picture. The 'industry scare stories' have become very real and the Aussie government has belatedly set up a senate inquiry to look at the matter.

If you like a bit of schadenfreude, this article from the Saturday Paper will be up your straße. The man leading the inquiry is the 'Liberal' MP Craig Kelly who describes himself as a 'fanatical nonsmoker'...

“I have grave concerns that we’re trying to attack this issue through taxation,” Kelly says. “Like many things we do in government, the unintended consequences can be worse than the problems we’re trying to overcome.”

The Gillard government introduced plain packaging in 2012 and dramatically escalated tobacco excise, implementing yearly rises of 12.5 per cent each September 1 for the next four years. The Turnbull government extended the annual excise hikes in this year’s budget until 2020.

But there is growing concern about the increasing availability of cheap, illegal cigarettes, and the possible impact on smoking rates.

No kidding.

“We’re creating all these law-enforcement issues and we’re basically going down the track of prohibition by price,” he tells The Saturday Paper.

By George, I think he's got it.

And yet the article contains so many of the same delusions and idiocies that have got Australia into this fix that it is difficult to see how they are going to find their way out. Firstly, there is the government's refusal to work with - and use the resources of - the people who know the most about tobacco...

The [tobacco] industry also wants to expand co-operation with law-enforcement agencies. But the degree to which that already occurs has attracted some criticism because of World Health Organisation guidelines that the tobacco industry not be allowed to influence governments.

Earlier this year, the three companies asked the Australian Competition and Consumer Commission for permission to work together – normally a breach of competition law – to withhold their products from retailers found to also be selling cheap illegal tobacco.

But the ACCC refused, saying they could already do so individually without permission, and allowing collusion could be seen as giving them a “quasi-regulatory role”. It said such permission might be inconsistent with the WHO guidelines and “could create community perception of a partnership between the Australian government (and government agencies) and the tobacco industry”.

Then there is the pig-headed refusal of anti-smoking groups to accept simple facts...

In its submission to the tobacco inquiry, Cancer Council Australia says increasing excise is “the single most effective method available for reducing tobacco consumption, increasing attempts to quit and reducing smoking prevalence, thereby reducing death and disease caused by smoking”.

“Cancer Council Australia is not aware of any evidence suggesting that increases in excise in Australia have led to an increase in the size of Australia’s illicit tobacco market.”

There is, of course, masses of evidence to show that high taxes and excessive regulation drive activity in the shadow economy and there is specific evidence from KPMG about the Australian tobacco market which the anti-smoking lobby ignores based on nothing but an ad hominem...

The council rejects the findings of a 2016 annual report that the three big players commissioned from KPMG UK, which estimated the Australian federal government is missing out on $1.61 billion in tax each year. The health sector says the report is discredited because the tobacco industry funded it.

That's not quite how discrediting evidence works, is it? But shouting 'industry!' is like saying a magic word in the 'public health' racket. Say it and inconvenient facts disappear.

Finally, there is open contempt shown towards smokers by politicians...

Despite his concerns, Kelly acknowledges price should still play a role.

“You have to have some price pressure,” he says. “You have to have the strongest possible law enforcement. You’ve got to make lepers of those that smoke… make their lives horrible.”

With that kind of hateful attitude, it is hardly surprising that Australian smokers want to minimise the amount of money they give politicians via extortionate tobacco taxes. Thanks to the policies of recent governments there are plenty of latter-day Al Capones who are prepared to help them do so.