ILLEGAL TOBACCO BOOM COSTS MILLIONS

The Federal Government is losing tens of millions of dollars in excise
every year from illegal tobacco distributors, the Customs Minister, Mr
Truss, has admitted.

Announcing a crackdown on excise cheats, Mr Truss said excise evasion had
become a burgeoning industry in recent years, involving criminal gangs, as
excise rates hit $232 for every kilogram.

Last week Customs officials raided an unlicensed tobacco packing and
cutting factory in Port Melbourne with stocks of tobacco that would
normally attract excise of more than $5 million.

A Customs spokesperson said the operation was selling half-kilogram bags of
cut tobacco through shops, cafes and door to door for as little as $17.50.

It was the biggest seizure in Australia since the High Court decision ruled
out State-based tobacco taxes in August last year, leaving the whole impost
for the Commonwealth to collect.

Six people have been detained and face fines of up to five times the value
of the excise avoided - $25 million - plus jail terms.

Mr Truss promised a concerted effort to crack down on all avoidance
activities, which he said was widespread across Australia.

Customs had been tipped off that illegal activities were growing, after
tobacconists notified them that sales had substantially declined.

Checked-by: Mike Gogulski