August 2026: Nearly 60% of Cigarette Packs in Ireland Avoided Domestic Tax, Research Reveals
A major research study tracking discarded cigarette packaging across Ireland has revealed that nearly six in ten cigarette packs consumed in the country avoided Irish tax, pointing to widespread tax avoidance and illegal smuggling. The Empty Pack Survey, conducted on behalf of tobacco manufacturer JTI Ireland, found that over 57% of collected cigarette packages were non-Irish duty-paid. Within that figure, 14% of all surveyed packs were identified as counterfeit products engineered to deceive consumers and bypass excise collection entirely.
The growth in non-duty-paid tobacco coincides with Ireland maintaining its position as home to the most expensive legal cigarettes in the European Union. Continuous excise increases in state budgets have driven the price of popular 20-cigarette brand packs past €18, widening the price gap with other EU member states and non-EU destinations.
Survey findings indicate that national smoking prevalence has remained essentially stable since 2019. Rather than reducing overall tobacco consumption, successive tax increases appear to have incentivized consumers to seek out lower-priced supply channels -including duty-free purchases, cross-border imports, and illicit street sales – rather than quit.
Significant geographic disparities in non-taxed cigarette consumption were observed across the country: Galway recorded the highest concentration of non-Irish duty-paid packs at 75%. Swords (Dublin) followed closely with 66% of surveyed packs avoiding local tax.
The cumulative financial impact on public finances is substantial. Revenue loss to the Irish exchequer from uncollected excise duty and VAT is estimated at approximately €5 billion since 2018, with losses in 2025 alone reaching an estimated €1 billion. Beyond lost state tax revenues, legitimate retail businesses face severe turnover losses as consumer purchasing shifts toward underground and non-domestic markets.
June 2026: Illicit Cigarette Trade in Latin America and Canada Persists Amid Tax and Enforcement Gaps
Illicit cigarette consumption in Latin America and Canada has reached critical levels, establishing the region as a primary global hotspot for illegal tobacco traffic. In 2025, 31.9% of all cigarettes consumed across 11 analyzed countries in the region were illicit, totaling about 77 billion sticks. This illicit consumption rate is twice the global average and has caused a massive fiscal drain, stripping governments of vital funding and resulting in an estimated USD 8.5 billion in lost tax revenue.
A major driver of this parallel economy is the overwhelming dominance of “Illicit Whites,” which are brands manufactured legally in one country but smuggled across borders to be sold tax-free elsewhere. In 2025, Illicit Whites accounted for 73% of all illicit cigarettes, amounting to 56.5 billion sticks. Paraguay remains the largest source of these products in the region, producing 44% of the total Illicit Whites. On the demand side, Brazil alone saw a staggering consumption of 40 billion Illicit Whites, cementing its status as the largest single market for illegal tobacco in the area and accounting for more than half of the region’s total illicit consumption.
Beyond Brazil, Canada remains another key market within the broader region, where the underground tobacco economy continues to operate as a multi-billion-dollar enterprise shaped by high retail prices and significant tax differentials between jurisdictions. The massive scale of illicit trade is attributable to persistent structural factors, including large price differences driven by varying taxation, well-established cross-border smuggling routes, and the widespread availability of both counterfeit and Illicit White brands. Despite a general downward trend in overall cigarette consumption, these illicit supply chains have proven highly resilient, adapting quickly to sustain their volumes and underscoring an ongoing challenge for regional law enforcement and tax authorities alike.
June 2026: Counterfeit Surge Pushes European Illicit Cigarette Share Past 11% Threshold
KPMG published the 20th annual edition of the “Illicit cigarette and heated tobacco consumption, and oral nicotine share in Europe” report based on a study commissioned by Philip Morris International (PMI). The report examines the scale, composition, and evolution of the illicit tobacco market across 38 European markets. This geographical footprint includes the 27 European Union (EU) member states alongside 11 non-EU nations, including the UK, Ukraine, and Switzerland. The historical data within this reporting cycle reflects notable consumption shifts triggered by external macroeconomic disruptions, specifically the post-pandemic recovery and the war in Ukraine.
Cigarette Consumption and Illicit Trade Dynamics
In 2025, total manufactured cigarette consumption across the 38 studied markets continued its downward trajectory, contracting by 4.1% year-on-year to 500.5 billion cigarettes. This decline was primarily driven by a 5.5% drop in Legal Domestic Consumption, which fell to 413.0 billion cigarettes. Conversely, total Non-Domestic consumption expanded to 87.5 billion cigarettes. Because legal cross-border travel purchases slightly declined, the entirety of this non-domestic growth was driven by illicit Counterfeit and Contraband (C&C) flows.
Illicit cigarette consumption rose by 5.9% compared to 2024, reaching an aggregate total of 55.32 billion cigarettes. This illicit volume accounted for 11.1% of total European cigarette consumption in 2025, resulting in an estimated €22.4 billion in lost tax revenues, with €16.7 billion of that total lost directly within the EU27.
The structural composition of the illicit market is divided into three distinct categories, which experienced notable shifts in 2025:
– Counterfeit: Completely fake cigarettes manufactured illegally without the authorization of the trademark owner. This segment experienced the most aggressive expansion, growing by 13.0% to account for 44.7% of all European C&C volumes.
– Other Contraband: Genuine tobacco products that are manufactured legally by the trademark owner but are smuggled or illegally diverted across borders. These products made up 38.4% of the total illicit market volume.
– Illicit Whites: Cigarettes that are manufactured legally in a specific factory or country, but are produced almost exclusively to be smuggled into foreign markets. This segment decreased slightly in 2025, comprising the remaining 17.0% of the C&C mix.
Geographically, illicit consumption remains highly concentrated, with seven countries reporting C&C shares above 20% of their total domestic market. France remains the largest single market for illicit cigarettes, where C&C reached 41% of total consumption, followed closely by Ireland (35%) and the United Kingdom (32%).
Counterfeit and Illicit Whites Brands and Labelling
Counterfeiting operations in 2025 remained heavily concentrated on a small selection of premium brands. Marlboro continues to be the primary target, accounting for 54.6% of the entire counterfeit segment across Europe, followed by Winston, Richmond, and Lambert & Butler. In terms of packaging, nearly two-thirds of all seized counterfeit packs bore Duty Free labeling, while the remainder utilized market-specific text tailored for high-tax destinations like the UK, France, and Greece.
The Illicit Whites segment experienced significant brand consolidation, with the top five brands capturing roughly 45% of total volume. American Eagle emerged as the leading Illicit Whites brand in 2025, followed by Karelia, Ome, and American Legend. While Belarus remains the largest known physical country of origin for Illicit Whites, its volumes are declining as inflows from Bulgaria grow. However, the vast majority of these products feature generic “Duty Free” or unspecified labeling to mask their exact manufacturing origin.
Organised Crime Trends and Enforcement Activity
Organised Crime Groups (OCGs) have fundamentally decentralized their operational models to evade law enforcement. Rather than operating integrated, large-scale factories, OCGs split manufacturing into multi-jurisdictional nodes – separating raw material processing, packaging printing, product assembly, and final storage across different countries. This modular structure ensures that a raid on a single facility does not compromise the broader supply chain.
Counterfeiting technology has become highly sophisticated, with illegal operations successfully replicating complex tax stamps, holographic security labels, and functional QR codes. To minimize risk, transport strategies have shifted away from large cargo containers toward high-frequency, small-volume distribution methods, including postal parcels, air freight, and commercial passengers. OCGs are also bypassing traditional retail by utilizing encrypted messaging apps and social media networks for direct-to-consumer digital distribution.
Data from illegal factory raids reflects these evolving tactics. While the total volume of cigarettes seized in raids fell slightly to 428.7 million in 2025, enforcement data confirms a clear shift toward specialized “Making & Packing” facilities over integrated, multiple-stage plants. Geographically, Poland recorded the highest frequency of individual factory raids, while operations in Hungary and Romania yielded the highest average volume of seized cigarettes per raid.
Heated Tobacco Product (HTP) Market Trends
Unlike the declining cigarette sector, heated tobacco remains a growing, overwhelmingly legitimate category across the 22 monitored European markets. Legal Domestic Sales expanded by 6.9% in 2025, with the strongest growth rates recorded in Croatia, Bulgaria, Spain, and Greece. Italy stands as the largest European consumer of heated tobacco, followed by Germany, Ukraine, and Poland. Illicit trade represents a minimal fraction of this category, with contraband heated tobacco accounting for just 1.2% of total consumption, and zero counterfeit variants identified during the study period.
Oral Nicotine Product Shares and Regulatory Fragmentation
The oral nicotine category across 15 monitored countries is characterized by sharp regulatory fragmentation and distinct regional usage. Nicotine pouches represent the dominant product form in nearly all surveyed markets except Norway and Sweden, where traditional tobacco snus maintains a cultural norm. Conversely, snus remains legally banned throughout the rest of the European Union and the UK, while chewing tobacco retains small market shares in countries like Germany, Belgium, and Austria.
This fractured regulatory landscape has driven a massive influx of products classified as “not eligible for sale” in restricted markets. In jurisdictions with total retail bans or de facto market blocks on nicotine pouches – such as the Netherlands, Germany, and Belgium, unpermitted products remain widely available to consumers through illicit retail distribution channels and non-domestic supply chains.
Long-Term Market Evolution: 2006 vs. 2025
Comparing data from 2025 against the inception of the study in 2006 across 25 core European countries highlights a structural transformation of the tobacco landscape. Over this twenty-year period, overall manufactured cigarette consumption fell by 44%, dropping from 682 billion to 381 billion cigarettes.
However, the market share of Non-Domestic cigarettes rose significantly from 13% to 20%, driven by an increase in both legal cross-border shopping and illicit trade. Counterfeit product lines experienced the most aggressive expansion, escalating from less than 1% of total consumption in 2006 to capturing 5% of the entire cigarette market by 2025. This growth aligns with a massive globalization of illicit supply chains; the number of distinct source markets originating illicit cigarette flows into Europe expanded from 52 countries in 2006 to 148 countries by 2025.
Download the KPMG Illicit Tobacco Consumption Report
April 2026: Illicit Cigarettes Account for One-Third of Consumption in Latin America & Canada, Costing $8.5 Billion in Lost Taxes
A new study by KPMG, commissioned by Philip Morris International (PMI), highlights the scale and persistence of illicit cigarette trade across Latin America and Canada, positioning the region as the global epicenter of illegal tobacco consumption. In 2025, 31.9% of all cigarettes consumed across 11 countries in the region were illicit, meaning nearly one in three cigarettes came from the black market. This equates to 77 billion illicit cigarettes, making the Region of the Americas (excluding the U.S.) the highest-incidence market globally – more than double the global average of 15%. The fiscal impact is significant, with an estimated $8.5 billion in lost tax revenues in 2025 alone, reflecting the scale of economic leakage to unregulated channels.
The study covers 11 countries: Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Mexico, and Panama, and underscores the broader implications of illicit trade – not only as a fiscal issue, but also as a challenge to public health, enforcement, and institutional effectiveness. Illicit trade remains structurally entrenched and has proven more resilient than the legal market, declining at a slower pace than overall cigarette consumption. The report suggests that steep tax increases and stringent regulations may be contributing to sustained demand for cheaper illicit alternatives.
At the country level, Brazil is the largest illicit market, accounting for 41.8 billion illicit cigarettes, or 54% of total illicit consumption across the 11 markets analyzed. Meanwhile, Panama and Ecuador have reached critical levels, with illicit products representing approximately 89% and 84% of total consumption, respectively – effectively displacing the legal market. The composition of the illicit market is also highly concentrated, with so-called “illicit whites” accounting for 73% of illegal consumption, equivalent to around 56.5 billion cigarettes. These products are typically manufactured legally in one country but intended for smuggling into higher-tax markets.
Overall, the findings point to a deeply embedded illicit market that continues to thrive despite regulatory tightening, highlighting the need for more coordinated enforcement and balanced policy approaches across the region.
July 2025: South Africa has become one the largest illicit cigarette markets in the world
According to a study commissioned by British American Tobacco (BAT), nearly 80% of the retailers in South Africa sell cigarettes below the minimum tax threshold – almost three times as many as 2022. The bulk of such cigarettes are sold via convenience stores and vendors at prices below even the minimum R26.22 ($1.5) tax per packet charged by the South African Revenue Service. Illicit cigarettes are smuggled from neighboring countries or manufatured by local players that have increased under-the-counter production following the country’s pandemic-era cigarette ban. Becoming one of the world’s largest markets for illicit cigarette sales, South Africa incurs around R28 billion ($1.6 billion) loss in annual tax revenue.
June 2025: Illicit cigarette trade is growing fast with penetration reaching 14.8%, outside China
In 2024, illicit cigarette trade reached 469 billion sticks, outside China. The global illicit cigarette penetration rate rose to 14.8%, up +2.1pp since 2020. Top-5 markets, Brazil (48.8 billion), Pakistan (43.6 billion), India (31.5 billion), Indonesia (29.2 billion), and Russia (26.1 billion), collectively make only 38% of the total illicit cigarette volume – which underlines the widespread nature of the trade. In 7 markets, illicit trade volume surpassed the legal cigarette sales volume: Panama (91.5%), Ecuador (77.4%), Peru (61.4%), Uganda (58.1%), Malaysia (55.8%), UAE (52.6%), and Pakistan (51.3%).
In terms of value, UK is the largest illicit market in the world. 30% of cigarette and 54% of roll your own tobacco consumption comes from illegal and other non-duty paid sources in the UK – corresponding to a lost legal retail market value of $13.5 billion. France is a close #2 with a lost retail value of $13 billion.
June 2025: 2.6 billion packs of illegal cigarettes were consumed in Europe in 2024
According to a study commissioned by Philip Morris International (PMI) for the 19th consecutive year, smokers in the 38 European countries (EU27 plus Norway, Switzerland, Ukraine, UK and the Balkans) consumed 52.2 billion illicit cigarettes (Counterfeit & Contraband; C&C) in 2024, corresponding to 10% of the total consumption and resulting in €19.4 billion tax revenue loss. Download the study report: Illicit cigarette consumption in Europe.
In 2024, 38.9 billion illicit cigarettes were consumed in EU27 alone – the highest level since 2015 – corresponding to 9.2% of total cigarette consumption and resulting in as much as €14.9 billion in tax revenue loss. A total of 500 billion illicit cigarette are consumed every year in the World, outside China and the U.S., corresponding to as much as 15% of the total consumption and resulting in an estimated tax revenue loss of up to $50 billion.
In France, the largest illicit market in Europe, 18.7 billion illicit cigarettes were consumed in 2024, corresponding to 37.6% of the total cigarette consumption. Ukraine and UK follow France with 6.0 and 5.9 billion illicit cigarettes consumed in 2024, respectively. In terms of share of illicit in total consumption, Ireland (32%) and UK (26%) follow France (38%).
For the first time, the study also includes the evolution of heated tobacco consumption in 10
selected markets. Contraband consumption in heated tobacco is estimated as 0.4 billion sticks in 2024, representing 0.9% of total consumption. The highest contraband volumes are found in Germany (0.15 billion sticks) and Poland (0.08 billion) with contraband having the highest share in total heated tobacco consumption in the UK (7.8%). No counterfeit flows have been identified in heated tobacco so far.
Notes:
(1) Contraband: Genuine products that have been either bought in a lower-tax country and which exceed legal border limits or acquired without taxes for export purposes to be illegally re-sold (for financial profit) in a higher priced market
(2) Counterfeit: Cigarettes that are illegally manufactured and sold by a party other than the original
trademark owner
February 2025: Philip Morris International calls for cross-sector, international collaboration to fight the illicit tobacco trade
Philip Morris International’s (PMI) India affiliate, IPM India, called for cross-sector, international collaboration to fight the illicit tobacco trade. The World Health Organisation (WHO) identifies India as both a transit hub and a key destination for illicit tobacco trade. The Government of India and enforcement authorities, like Directorate of Revenue Intelligence (DRI) and Customs, aim to mitigate the issue. The seizures of foreign origin illegally smuggled cigarettes into India via sea, air and land borders in 2023/24 stood at 91 million sticks valued at ₹180 crores.
11.6% of the global cigarettes consumed are illicit, which impacts governments across the globe to the tune of $40.5 billion in tax losses. Illegal cigarette volume in India reached 30.2 billion sticks in 2022, trailing only behind China and Brazil.
February 2025: The incidence of illicit cigarettes in Malaysia still remains at 55% despite a decline
The incidence of illicit cigarettes in Malaysia declined by 1.0pp to 55% in 2024, marking its lowest level since peaking at 63.8% in 2020. A Govermental Multi-Agency Task Force, led by the Ministry of Finance, is in place in Malaysia to curb illicit cigarette activities and bring stringent enforcement against illicit operators.
Despite these efforts, counterfeit tax stamps are on the rise and now account for 13.8% of the total market (- up from 8.7% in 2023). Tobacco companies demand transition from paper-based tax stamps to digital tax codes. Meanwhile, a good progress is achieved in illicit white cigarettes with its incidence in the total market down from 39.5% in 2023 to 34.3% in 2024.
Price is the major driver of both illicit cigarettes and disposable vapes in Malaysia. Legal cigarettes cost RM7.80 (US$1.75) per pack, compared to RM3.90 (US$0.88) for a pack of illicit cigarettes. The daily consumption cost for vapes ranges from RM2.80 (US$0.63) for disposable vapes to RM6.60 (US$1.48) for a closed-system vape (such as, British American Tobacco’s VUSE).
September 2024: Illicit cigarette consumption remains at a high level in the European Union, with Organized Crime moving operations closer to the Western Europe
According to a report1 commissioned by Philip Morris International (PMI) to KPMG, total cigarette consumption in Europe declined by -2.6% to 525.4 billion sticks in in 2023 despite the illicit cigarette (CC: Counterfeit & Contraband) consumption increasing by +3.2% to 52.2 billion sticks. Legal Domestic (LDC) consumption declined by -4.5% to 444.1 billion sticks while the Legal Non-Domestic (ND-L) consumption increased by +20.7% to 29.2 billion sticks.
Illicit now corresponds to 10% of the total cigarette consumption in Europe. In the report, 38 European markets are analyzed, including the EU27, Moldova, Norway, Switzerland, Ukraine, the UK, Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia. Specifically, in the EU27, 35.2 billion illicit cigarettes were consumed in 2023, accounting for 8.3% of the total consumption (+0.1pp versus 2022). Overall, EU27 countries lost an estimated €11.6 billion in tax revenue, up from €11.3 billion in 2022.
France continues to remain the largest market for illicit cigarettes across the 38 markets with 16.8 billion sticks volume and an estimated €7.3 billion in tax revenues lost. Two non-EU27 countries, Ukraine and UK, follow France in terms of illicit volume with 8.4 billion (+15% vs 2022) and 6.7 billion (+14% versus 2022) sticks, respectively. In terms of illicit’s share in total consumption, France leads Europe with 33% (i.e. one in every three cigarettes consumed in France are illicit). Ireland (28%), UK (26%), Greece (24%) and Ukraine (22%) follow France.
PMI states that at least 113 clandestine cigarette manufacturing sites in 22 European countries were disrupted by regional and local authorities in 2023 alone and organized crime groups are increasingly locating production facilities nearer Western European countries.
July 2024: Illicit Tobacco Purchasing Becoming Normalized Among Adult Smokers, JTI-Commissioned Study Finds
Buying illegal tobacco products is rapidly becoming a normalized consumer behavior, according to a landmark study commissioned by Japan Tobacco International (JTI). The report, titled Fighting the Dark Underworld: How the Illegal Trade in Tobacco Threatens to Overwhelm Us, reveals that 43% of adult smokers surveyed across four major markets – Canada, France, the Philippines, and the United Kingdom – are comfortable knowingly purchasing cigarettes that are produced or sold illegally .
The study outlines five core systemic factors enabling organized crime networks to expand illicit tobacco distribution across borders:
– Cost-of-Living Crisis: Widespread inflationary pressure and compromised household budgets are pushing price-sensitive consumers toward cheaper black-market alternatives.
– Excessive Taxation and Tax Revenue Loss: Rapid excise tax increases continue to widen price gaps between legal and illicit products. The World Bank estimates that governments globally lose US$40 billion to $50 billion annually in uncollected excise tax alone.
– Technological Advancements in Distribution: Digital platforms and e-commerce channels are outrunning traditional law enforcement. Among adult smokers surveyed, 14% reported recently buying illegal tobacco directly through social media channels.
– Policymaker Disconnect vs. Public Alarm: The report highlights that policymakers often understate the severity of the illegal trade. In contrast, 50% of surveyed citizens view illicit tobacco as a severe national threat – ranking it alongside narcotics (54%) and terrorism (49%). Additionally, 61% explicitly stated that illegal tobacco sales are not a victimless crime.
– Weak Enforcement Penalties and Low Inspection Rates: Criminal syndicates view illicit tobacco as a low-risk, high-profit enterprise. According to data from the United Nations Office on Drugs and Crime (UNODC), fewer than 2% of global shipping containers are physically inspected, leaving massive blind spots in global supply chains.
Industry representatives and law enforcement experts cited in the report argue that relying solely on excise tax hikes without corresponding border enforcement and harsher legal penalties will continue to subsidize organized crime while eroding state revenue bases.
March 2024: Illicit Tobacco Market Surges to 58% in South Africa, Draining R18 Billion in State Revenue
A study from the Research Unit on the Economics of Excisable Products at the University of Cape Town (UCT)2 reveals that illegal cigarettes accounted for 58% of South Africa’s total tobacco market in 2022, highlighting a structural market collapse that has drained public revenues and forced major workforce cutbacks. The UCT research demonstrates an unprecedented expansion of illicit trade over the past decade: the illegal market share surged from just 5% in 2009 to a peak of 60% in 2021, before settling slightly at 58% in 2022. Consumption of illicit cigarettes reached 19.4 billion sticks in 2022, far outpacing the 14.3 billion sticks sold through legal, tax-paid channels.
The expansion of illicit trade has severely impaired national treasury collection. In 2022 alone, the South African government lost an estimated R15 billion in uncollected excise duties and R3 billion in lost Value Added Tax (VAT) – a total R18 billion loss representing roughly 1% of total state revenue.
According to researchers, two critical factors triggered the rapid growth of the illicit market:
– The 2020 COVID-19 Sales Ban: A five-month nationwide prohibition on legal tobacco sales during the pandemic severely disrupted compliant supply chains, incentivizing millions of smokers to turn to underground channels.
– SARS Capacity Reductions: Systemic operational and enforcement capacity cuts at the South African Revenue Service (SARS) beginning in 2014 weakened tax compliance monitoring and border enforcement capabilities.
The surge in illegal sales has devastated compliant market participants. Market leader British American Tobacco South Africa (BATSA) estimates that illicit sales have continued to expand, now commanding approximately 70% of total national cigarette consumption. As a direct result of losing roughly 40% of its sales volume to illegal competitors since 2020, BATSA confirmed it is further scaling down its direct retail distribution and supply chain operations. The company, which permanently employed around 1,800 people in 2019, has been forced to reduce its workforce by more than 30% over the last four years.
February 2024: BAT Malaysia Urges Swift Action on Illicit Trade as 2023 Black Market Share Reaches 55.6%
British American Tobacco (Malaysia) Berhad (BAT Malaysia) reported that illegal cigarettes accounted for a high 55.6% of the country’s total tobacco market in 2023, based on its fourth-quarter and full-year 2023 financial results released this month. Following the announcement, the tobacco group called on the Malaysian government to immediately implement enforcement initiatives introduced under Budget 2024 to curb illicit supply chains and recover an estimated RM5 billion ($1.05 billion) in uncollected tax revenue.
In addition to enforcing Budget 2024 measures, BAT Malaysia cautioned policymakers regarding the implementation of upcoming subsidiary legislation under the newly passed Control of Smoking Products for Public Health Act. The company urged health and regulatory authorities to ensure all new statutory frameworks remain evidence-based, balanced, and enforceable. Oversimplified or excessively restrictive mandates, the group warned, risk unintentionally driving price-sensitive consumers away from legitimate, regulated channels and expanding the uncontrolled illicit e-vapor and black market tobacco ecosystems.
September 2023: Australian Border Force Seizes Nearly 1 Billion Illegal Cigarettes as Tobacco Tax Hikes Surge Prices
Australian Border Force (ABF) officers have intercepted nearly one billion illicit cigarettes over the past two years, curbing a black market trade that represents roughly A$1.1 billion ($700 million) in evaded tax revenue. The massive enforcement total highlights the growing strain on Australia’s borders as organized criminal syndicates move to capitalize on the country’s rapidly escalating tobacco excise rates.
The surge in illicit imports coincides with the implementation of additional federal tax hikes taking effect this month. Under the government’s phased excise schedule, tobacco duties will increase by 5% annually above indexation for three consecutive years starting September 1, 2023.
– Current Retail Costs: An average pack of 25 cigarettes currently retails around A$40, making Australian tobacco among the most expensive in the world.
– Projected Increase: Continued annual excise increases and indexation will push the average pack price past A$50 within four years.
– Economic Incentives: With domestic retail prices climbing rapidly, criminal networks face unprecedented profit margins by smuggling duty-free or counterfeit tobacco products into local markets.
Federal authorities emphasized that combating tobacco smuggling remains a top operational priority, noting that funds generated from illegal tobacco sales directly finance broader organized crime networks. While public health officials maintain that steep price increases are the single most effective tool to lower smoking rates – targeting a national daily smoking prevalence below 10% by 2025 – enforcement agencies face an increasingly sophisticated black market as price-sensitive consumers seek out illegal alternatives.
Background Information
The World Health Organization (WHO) defines “illicit tobacco trade” as “any practice or conduct prohibited by law and which relates to production, shipment, receipt, possession, distribution, sale or purchase including any practice or conduct intended to facilitate such activity”.
The most common form of illicit tobacco trade for cigarettes are:
– Contraband: genuine cigarettes that have been bought in a low-tax country and which exceed legal border limits or are acquired without taxes for export purposes, to be then illegally re-sold in a market with higher prices
– Counterfeit: cigarettes manufactured without authorization of the rightful owners and with intent to deceive consumers and to avoid paying duty.
