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Illicit tobacco

Illicit tobacco can be defined as trade in ‘any tobacco on which legally required duties and taxes have not been paid’.

In Australia illicit tobacco typically involves either roughly processed tobacco (often referred to as ‘chop chop’) or manufactured tobacco products (either roll-your-own ‘RYO’ tobacco or ready-made cigarettes) smuggled from overseas without payment of customs duty.

Illicit manufactured products smuggled from overseas includes: 

  • products produced by registered trademark holders but diverted from the legal market;

  • counterfeited products; and

  • ‘products’ produced specifically for the illicit market (often referred to as ‘cheap whites’ or ‘illicit whites’).

The National Drug Strategy Household Survey (NDSHS) found in 2019 that 4.9% of people who smoked used unbranded tobacco at least occasionally—roughly the same proportion who did so in 2010. Approximately 6.2% of people who smoked reported having purchased tobacco products in Australia without plain packaging, including 2% who had purchased 15 or more packs over the previous three months. The vast majority of people who smoke had either never seen tobacco products without plain packaging (84.8%) or had seen them but not purchased them 9%. Results of the NDSHS 2022-23 are due for release on 29th February 2024.

The tobacco industry has funded several reports with claims about the size of illicit tobacco trade in Australia. Critiques of these reports have highlighted numerous flaws in their methodology and show that tobacco industry figures for illicit tobacco contained in the reports are highly inflated compared to government figures on illicit tobacco use in Australia. Copies of these critiques and links to the original reports can be found on the Plain Facts website.

The Australian Taxation Office now publishes its own estimates of the size of the illicit market as part of its Tax Gap Analysis initiative. Its latest estimate puts the net tax gap on tobacco excise and customs duty at 13.1%—considerably higher than the 5.4% estimated for 2016-17.

Further information

For further information, on illicit trade, see the following section from Tobacco in Australia: Facts & Issues:

Last updated February 2024.

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