13A.8.1 Internet sales
Amendments to the Tobacco Advertising Prohibition Act 1992 first introduced in 20101 and passed in early 20122 made it illegal to advertise tobacco products on the Internet, The Act also provides for the establishment of regulations that require:
‘information about any fees, taxes and charges payable in relation to tobacco products’ S4(b)ii
The State of South Australia has gone further and in 2008 banned sales of tobacco products over the internet.3
13A.8.2 Duty-free
In its 2012–13 Budget, the Australian Government announced that it would reduce the personal allowance for duty-free tobacco from 1 September 2012 from ‘250 cigarettes to 50 cigarettes or 50 grams of other tobacco products.’ This measure was expected to increase receipts by $660 million over four years.4
The Australian Government further decreased the allowed quantity of duty-free tobacco for travellers arriving in Australia as part of the health initiatives announced in the 2016–17 Federal Budget. From 1 July 2017, travellers aged 18 years and over entering Australia were able to bring only 25 grams of duty-free tobacco, plus one open packet. The tobacco can be in any form (cigarette, loose leaf and so on) and is equivalent to approximately 25 cigarettes.5
There would be no legal impediment to the government banning sale in Australia of duty-free products for arriving passengers to import duty-free or for leaving passengers to export. However, Australia is a party to several agreements relevant to the import of duty-free products purchased elsewhere.
These include:
- The Convention Concerning Customs Facilities for Touring as amended 5 September 1966 the ‘New York Convention’ (New York, 4 June 1954).i
- The International Convention of the Simplification and Harmonization of Customs Procedures of 18 May 1973 (as amended by the Protocol of Amendment to the International Convention on the Simplification and Harmonization of Customs Procedures of 18 May 1973, Brussels, 26 June 1999) ‘the Kyoto Convention’ii and
- the OECD Decision–Recommendation on International Tourism Policy 1985iii
The New York Convention defines ‘tourist as a non-resident and therefore only applies to non-residents. The Kyoto Convention sets out a recommended level only, rather than a binding Standard. The OECD Decision–Recommendation states:
‘In adopting this Decision–Recommendation, the Council:
- NOTED the reservations and observations made by individual Member countries with relation to certain elements of Annexes 1 and ii to the Decision–Recommendation and expressed hope that it would be possible for these to be removed over the course of time.
- AGREED that the adoption of the Decision–Recommendation did not prevent a Member country from taking action which it considered necessary for the maintenance of public order, or the protection of public health, morals or safety.’
The provisions of these agreements would need to be assessed before Australia could move to further restrict the import of duty-free cigarettes in Australia.
13A.8.3 Smuggled tobacco products
Australia has contributed to an anti-tobacco smuggling alliance established in 2004 to exchange information and coordinate efforts to fight smuggling within the Asia Pacific region.6
In June 2012 the Australian Government introduced legislation to make smuggling of tobacco products an offence punishable by up to ten years imprisonment or 100 penalty units.7
On July 2019, the Government announced the commencement of the new laws prohibit the importation of specified tobacco products without a permit and strengthen the customs duty framework for tobacco. The Treasury Laws Amendment (Illicit Tobacco Offences) Act passed in August 20188 created a suite of tobacco offences building on measures included in the 2016–17 Budget to increase enforcement options available for illicit tobacco offences, including penalties. It:
- Set penalties at a level that was anticipated to be high enough deter illegal activity and to take into account the value of substantial annual increases in the rates of duty that applied in each year from 2013.
- Created provisions to ensure that illicit tobacco can be seized and forfeited even if the origin of production or manufacturing is unknown (so that it no longer had to be established whether the failure to pay duty constituted an offence under the Excise Act or the Customs Act, a problem which had previously prevented penalties to be applied).
- Created new offences for the possession of equipment for producing or manufacturing illicit tobacco.
- Allowed for higher penalties for greater quantities of tobacco.
The 2018–19 Budget Shadow Economy Package – combatting illicit tobacco further strengthened these measures by removing the option for importers to enter tobacco products into a licensed warehouse. The new collection arrangements which took effect from 1 July 2019 require importers to hold a valid permit and to pay duty on entry of product to the country. It aimed to effectively eliminate leakage from warehouses to the illicit market.
The Australian Government’s enforcement of measures to prevent evasion of duty on tobacco has been greatly enhanced through the establishment of a multi-agency Illicit Tobacco Taskforce (ITTF) on 1 July 2018 as part of the Department of Treasury Shadow Economy Taskforce.9 Funding and staffing are provided by five federal agencies with distinct but complementary powers and functions, to work collaboratively to protect Commonwealth revenue and enhance border protection:
- Australian Border Force within the Department of Home Affairs
- Australian Taxation Office
- Australian Criminal Intelligence Commission
- Australian Transaction Reports and Analysis Centre
- Commonwealth Director of Public Prosecutions.
The Illicit Tobacco Taskforce (ITTF) aims to target, disrupt and dismantle crime syndicates, and to prosecute people involved. Through its joint-agency approach, it has powers to effectively investigate, prosecute and dismantle serious organised crime groups responsible for illicit tobacco smuggling, domestic cultivation, manufacturing and distribution. Material on the Australian Taxation Office’s (ATO) Tobacco Tax Gap website describes how the taskforce:
- Targets supply chain vulnerabilities both within and outside Australia through enhanced data analysis, complex profile referrals to the Home Affairs National Profiling Centre, liaison and operational engagement with international law enforcement partners and customs organisations.
- Targets the criminal wealth of the actors in cooperation with the Criminal Assets Confiscation Taskforce and the Serious Financial Crime Taskforce, aligning ITTF efforts with Commonwealth Organised Crime Strategic Framework in targeting the criminal economy.
- Uses specialist law enforcement capabilities available to partner agencies in pursuit of the ITTF mission.
- Leverages the data-mining and financial analysis capabilities of Australian Transaction Reports and Analysis Centre and the ATO to trace the illicit financial flows derived from illicit tobacco trafficking domestically and across Australia’s border to generate a coherent picture of the illicit tobacco financial activity and generate opportunities for disruption.
- Works closely with the Commonwealth Department of Public Prosecution in the preparation of briefs of evidence in both the criminal and civil (proceeds of crime) jurisdictions
- Works with domestic and international law enforcement and customs bodies, based on operational requirements, to leverage additional capabilities and support for ITTF operations.
Well-publicised criminal prosecutions are particularly important as deterrents, as has been a feature of strategies particularly in the UK and Colombia.10 This strategy is one that has been adopted by Australia’s national Illicit Tobacco Taskforce which frequently reports on seizures from farms and at the ports.
The taskforce also collaborates with the Australian Government Department of Health and Aged Care which works with the National Measurement Institute (NMI).iv Under a Memorandum of Understanding, the NMI undertakes education and checks of stock aiming to help ensure that retailers meet requirements of the Tobacco Plain Packaging Act 2011.v
The Australian Taxation Office estimated that these combined enforcement activities are seizing a high percentage of the volume of illicit tobacco entering the market in Australia—more than 50% (1,364of the estimated 2,599 tonnes worth of tobacco products being produced or smuggled).11
The national Illicit Tobacco Taskforce consults with law enforcement partners in states and territories. These state and territory parties are not formally recognised or resourced as part of the Taskforce, however notable joint operations are undertaken on occasion as need arises.12,13 In a joint operation between Victoria Police, Australian Border Force, the Australian Taxation Office, the Therapeutic Good Administration and Sherriff’s Office on the 19th October 2023 for instance, Victoria Police from the so-called VIPER Taskforce raided 34 retail stores across Melbourne and seized over half a million cigarettes and 30kg of loose tobacco linked to a series of incidents involving fire bombings of tobacco outlets.12
Illicit Tobacco and E-Cigarette Commissioner
The Illicit Tobacco and E-Cigarette Commissioner (ITEC) was established in 2024 within the Australian Border Force by the Australian Government to coordinate efforts to combat the threat of illicit tobacco and e-cigarettes to the community. The ITEC was created by the Government following the passage of the Public Health (Tobacco and Other Products) Act 2023 which included an amendment to create this office which was moved by the Liberal Opposition Health spokesperson.
The legislative responsibilities of the ITEC are to provide strategic advice to Government and deliver a report on the state of illicit tobacco and e-cigarettes. Responsibilities are to:
- provide strategic leadership across all levels of government to improve cooperation and communication
- bring together key law enforcement and health agencies to use their combined expertise, resources and knowledge
- guide policy and operational decisions based on data‑driven insights
- create a strategy to tackle the rapidly evolving trade in illicit tobacco and e‑cigarettes
- gather, study and share information to support evidence‑based interventions and address emerging trends
- adapt policies and strategies to respond to new challenges in the illegal market
- guide changes in laws and policies to handle the complex issues around illicit tobacco and e‑cigarettes.
The ITEC Commissioner operates independently but is part of the Australian Border Force (ABF) in the Department of Home Affairs.
Source: ITEC website
iii Not available on-line.
References
1. Parliament of Australia. Tobacco Advertising Prohibition Amendment Bill 2010 Last update: Viewed Available from: https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22legislation/billhome/r4488%22.
2. Parliament of Australia. Tobacco Advertising Prohibition Amendment Act 2012 Last update: Viewed Available from: https://www.legislation.gov.au/Details/C2012A00005/Html/Text, http://www.legislation.gov.au/Details/C2012A00005.
3. Tobacco and E-Cigarette Products Act (SA). 1997 [cited 30(1)e; Available from: https://www.legislation.sa.gov.au/__legislation/lz/c/a/tobacco%20and%20e-cigarette%20products%20act%201997/current/1997.26.auth.pdf.
4. Budget 2012-13. Budget paper no. 1. Statement 5: Rebenue estimates by revenue head. Canberra: Australian Government, 2012. Last update: Viewed.
5. Australian Government Department of Health. Duty free tobacco allowance Australian Government Department of Health, Last update: Viewed Available from: https://www1.health.gov.au/internet/publications/publishing.nsf/Content/tobacco-control-toc~duty-free-allowance.
6. Anon. Fighting tobacco smuggling in Asia-Pacific debated. Vietnam News Agency, 2004. Available from: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/13320/Default.aspx
7. Parliament of Australia. ParlInfo - Customs Amendment (Smuggled Tobacco) Bill 2012 Last update: Viewed Available from: https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22legislation/bills/r4858_first-reps/0000%22;rec=0.
8. Treasury Laws Amendment (Illicit Tobacco Offences) Act. 2018; Available from: http://classic.austlii.edu.au/au/legis/cth/num_act/tlatoa2018455/.
9. Australian Taxation Office. Illicit Tobacco. Canberra 2023. Last update: 12 Oct; Viewed 21 Oct. Available from: https://www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/illicit-tobacco/.
10. Dutta S. Confronting illicit tobacco trade: a global review of country experiences, in World Bank. 2019. Available from: http://documents.worldbank.org/curated/en/677451548260528135/pdf/133959-REVISED-2-v1-WBG-Tobacco-IllicitTrade-FINAL-v3-web.pdf.
11. Australian Taxation Office. Tobacco tax gap: Methodology. Canberra 2022. Last update: Oct 2022; Viewed 21 Oct. Available from: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-gap/Tobacco-tax-gap/?page=4.
12. Australian Border Force. Warrants executed across Melbourne targeting illicit tobacco, 2023: Canberra. Available from: https://www.abf.gov.au/newsroom-subsite/Pages/Warrants-executed-across-Melbourne-targeting-illicit-tobacco.aspx.
13. Australian Border Force and Queensland Police Service. 57 million illegal cigarettes seized in joint operation, in Australian Criminal Intelligence Commission2018. Available from: https://www.acic.gov.au/media-centre/joint-media-releases/57-million-illegal-cigarettes-seized-joint-operation.