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Sydney flooded with illegal cigarettes

May 30, 2011

Illegal cigarettes on sale in Sydney shops. Journalist Joe Hilderbrand buys chop smokes. Intershop illegally imported cigarettes sold from under the counter. Pic. Stephen Cooper Source: The Daily Telegraph

SYDNEY is flooded with blackmarket cigarettes selling for as little as half the price of a genuine pack, but peddlers are avoiding punishment because it is tobacco companies who catch them.

The Daily Telegraph was able to purchase Chinese-made counterfeit cigarettes from outlets at Kings Cross and Warwick Farm.

British American Tobacco (BAT) conducts about 1000 undercover purchases each year and has taken legal action against more than 100 retailers in the past three years, effectively suing them for copyright infringements.

The Daily Telegraph was told this coincided with a drop-off in the number of inspections and prosecutions by the Australian Taxation Office (ATO), which is putting resources into chasing high-profile millionaires through Project Wickenby.

Illegal retailers caught by the ATO would have to pay five times the excise they avoided, plus fines and possible jail time.

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In the year before Wickenby began, the ATO completed 53 tobacco prosecutions and had another 24 in progress. Last year it completed just seven.

Sources said it was left to tobacco companies to regulate the industry, serving notices on businesses for copyright infringement. Lawyers for BAT demand restitution for the estimated lost income and the retailers are told not to do it again.

In some cases counterfeit cigarettes are disguised to look like known brands – Winfield is a popular choice – and in others the brands are fabricated.

In just five visits to suspect shops, The Daily Telegraph was able to purchase an $80 carton of Winfield Blues from a Kings Cross tobacconist and three packets of tax-free cigarettes labelled “Intershop” from a Warwick Farm store for just $8 each.

The illegal import and sale of tobacco products led to $1.1 billion in lost tobacco excise and GST to the federal government

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