The illegal tobacco trade has become a very lucrative business worldwide.
In Australia, for example, illegal, excise-evading cigarettes now comprise half of the products sold to the country’s 2.7 million smokers, according to the ABC.
It’s thought that the AU$10 billion a year in revenue there is going straight into the pockets of organised crime.
But has this trend made it to New Zealand shores? And how much of a headache is it causing those protecting our borders?
Nigel Barnes, Chief Customs Officer Fraud and Prohibition, told The Front Page it’s been trending upwards here.
“Over recent years, the efforts to smuggle illicit tobacco have become more sophisticated and been of larger quantities,” he said.
“In particular, we’re seeing that illicit tobacco smugglers will mirror what we see drug smugglers do. They’ll use similar concealment methods and similar tradecraft.”
The heightening of the excise tax on tobacco has always raised concerns that it would increase the product’s liquidity on the black market.
Excise tax increased to $1812.61 per kilo compared to $393.03 in 2009. Depending on the brand, the tax makes up around 80% of the cost of a pack of smokes.
In October, following a referral from the Overseas Customs Administration, Customs seized more than two million cigarettes found in a container from Southeast Asia. The haul had a street value of roughly $3 million.
In 2018, it found $4 million in cash in a storage unit - the proceeds of the illicit tobacco trade.
Some experts have suggested it has become particularly tempting for gangs as a perceived “lower risk” import, compared to Class A drugs.
The maximum penalty is five years’ imprisonment under the Customs and Excise Act offences, versus life imprisonment for harder substances.
“What I think motivates these criminals is actually the money. There is a difference in the maximum penalty, but what really hurts these guys is when you take their money and their assets.
“So, wherever possible, we make referrals and we work quite closely with the Police Asset Recovery Unit, because what really hurts them is taking away their ill-gotten gains,” he said.
“We definitely don’t want to end up with a problem on the scale that Australia has. There are, in fact, even more concerning homicides and arsons attributed to the illicit tobacco problem in Australia, and we don’t want to see that here.
“We work quite closely with our partners overseas, not just the Australian Border Force, but also His Majesty’s Revenue and Customs in the UK, as well as other jurisdictions in Southeast Asia,” he said.
Barnes said knowing how much illicit tobacco has slipped through the cracks is difficult.
“There have been various attempts to estimate the size of the illicit market in New Zealand. The University of Auckland and University of Otago have both completed studies in recent years on it, and the tobacco industry also completes studies which they publish.
“The range and the size of the illicit market are, in these estimates, huge. The lowest one is around 6.8% and the highest is around 24%. Is it somewhere in between? Probably, but I wouldn’t really want to take a stab.”
Listen to the full episode to hear more about New Zealand’s growing illegal tobacco problem.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.