Illegal tobacco is booming across Australia with a 30 per cent increase in black market trade in the past two years costing taxpayers more than $1.35 billion, a new report has found.

Illicit tobacco continues to fund international crime syndicates with record tax increases and plain packaging fuelling the demand for cheap counterfeit and contraband cigarettes, according to the report released today.

The report, compiled by international auditing firm KPMG, found that shops are continuing to sell illegal tobacco despite threats of fines of up to $340,000 for selling just one packet. Retailers in Cabramatta, Campsie and Fairfield were found to be Sydney’s most brazen offenders.

The report revealed that the 2.6 million kilograms of illegal tobacco consumed last year represented 14.5 per cent of Australia’s total tobacco consumption and, if sold legitimately, would have attracted an excise of $1.35 billion.

The unprecedented growth in illicit tobacco came during a period which had two 12.5 per cent tobacco excise increases and follows the introduction of plain packaging in December 2012.

The KPMG report was commissioned by the three big players in the tobacco industry.

British American Tobacco Australia (BATA) spokesman Scott McIntyre said people were down-trading from legal brands to the black market “in droves”.

“Illegal tobacco is mainly smuggled into Australia from overseas and sold at much lower prices than legal cigarettes, avoiding tobacco excise tax obligations,” he said.

“They’re normally under $10 a pack, have no health warnings and aren’t plain pack compliant.”

The Australian Crime Commission has previously reported that organised crime is heavily involved in the importation of illegal tobacco.

Australian Customs and Border Protection detected 178 tonnes of illicit tobacco and 147 million contraband or counterfeit cigarette sticks were intercepted in sea cargo last year, the haul evading $139 million in taxes.

Consumption of unbranded loose leaf tobacco, or chop chop, grew by 43 per cent in 2014 and accounts for 53 per cent of total illicit consumption. Illegal chop chop is grown in Australia but is most commonly smuggled in from overseas.

“Smokers are literally walking into their corner store and asking for the cheapest pack available,” Mr McIntyre said.

Extracted in full from the Daily Telegraph.