Honest traders hit hard by black market trade

Ritchies IGA chief executive Fred Harrison said the trade in illicit cigarettes was significantly reducing sales and foot traffic to his stores, cutting tobacco sales by up to 80 per cent of what they were four years ago.

“It’s been allowed to flourish. It’s now got to the stage where these operators are advertising and promoting online; they’re displaying products in store. And it’s laughable, but it’s 100 per cent illegal,” he said.

“We’re still profitable, but it’s because we’re having to make a whole lot of cuts, remove staff from the stores to try and balance the books.”

Ritchies IGA is the largest independent supermarket and liquor company in Australia, with a store in Cobram and others spread across the east coast.

While a pack of cigarettes might set you back between $35 and $50 at a legitimate trader, illicit smokes can be bought for as little as $15 at one store in town.

Despite police being aware of the issue, business in the excise-evading products is thriving.

With the Federal Government tobacco excise sitting at $1.49832 per cigarette, up over 280 per cent from what it was in September 2015, a legal pack of 20 cigarettes will attract almost $30 in excise alone.

Mr Harrison said the Federal Government was $10 billion down in excise duty purely from tobacco.

“And it’s not because people have stopped smoking,” he said.

“It’s purely because people are now moving to illicit product, and that product is now representing about 53 to 54 per cent of the tobacco market.”

It comes amid doubt over whether the state government’s new tobacco licensing scheme, set to come into effect from February 1 next year, will have enough teeth.

Specifically, questions have been raised over whether the 14 inspectors — tasked with making sure businesses are complying with their tobacco trading licences — will be enough to do the job.

State Member for Ovens Valley Tim McCurdy slammed the government’s plan as “a drop in the ocean”.

“At this rate, we’re not going to change a thing with 14 inspectors,” Mr McCurdy said.

“You can’t be serious about throwing 14 health inspectors on an issue where we have weekly fire-bombings still.”

Mr McCurdy called on the government to increase the number of inspectors to 250, and to allow the police to have a greater role in enforcement.

He said the Federal Government’s excise on tobacco was “not helping”.

“When you’re paying 50 bucks for a pack of smokes, and you can buy them for $7, no wonder people are seeking out illicit tobacco,” Mr McCurdy said.

“Do I blame people for doing it? Absolutely not.”

Under the state government’s licensing scheme, a business must apply for a licence if it sells tobacco.

The state government says the regulator, Tobacco Licensing Victoria, will grant licences only to ‘fit and proper people’, who may have their application rejected based on their history or known associates.

Casino, Gaming and Liquor Regulation Minister Enver Erdogan said the scheme would help smoke out organised crime and protect legitimate retailers.

“We will support businesses through the process ahead of enforcement next year,” he said.

The scheme will back the work of Victoria Police officers, who are coming after crime lords, according to Police Minister Anthony Carbines.

“If you are doing the wrong thing and dealing in illegal tobacco, you will get caught, and you will face the toughest penalties in Australia,” he said.

But according to Mr Harrison, the scheme in isolation won’t be enough to resolve the problem.

“What needs to happen is there needs to be police enforcement of the law and the outlets that are selling illicit tobacco should be raided and closed,” he said.

“Not closed for a day or two, but closed for a minimum of six to 12 months.”