00:00I reckon it probably would have been about 12 months ago when the pop-up shop started.
00:10It is so lucrative and the margins are so big, it is really frustrating.
00:19Something doesn't add up around here.
00:22There's smoke, but business isn't exactly firing for Matt Evans.
00:26I'm the only one that actually supplies really.
00:29No one else does it anymore.
00:33Matt's now the only wholesaler supplying cigarettes to servos and stores across the Bega region
00:38on the New South Wales South Coast.
00:40But as more tobacconists have popped up, his business has been drying up.
00:45There's now businesses that used to order every single week.
00:49Some of them are ordering every second week, every third week.
00:52It's just not worth it, they can't compete with illegal tobacco in town.
00:57Here in Cobargo, Dave Allen is holding on.
01:01His hotel sells cigarettes legally.
01:03In the last 12 months we've gone down by about 30%.
01:06What's changed is a black market that he says is operating in plain sight.
01:12In Bega, a town of about 5,000, cigarettes have long been sold at supermarkets, petrol
01:17stations and a single tobacconist.
01:20But recently, another three have opened.
01:23And it appears to be a state-wide trend.
01:26The number of shops selling tobacco in New South Wales has exploded from 14,500 to 19,500
01:34in the space of four years.
01:36Unlike other states, stores here don't need a licence to sell cigarettes.
01:41They just need to register with the health department.
01:44Health officials were here only a week ago conducting inspections and while they won't
01:49confirm the details, locals say about 10 stores on the South Coast were caught selling under
01:55the counter cigarettes.
01:57The tobacco was seized and in most cases, the owners were issued with on-the-spot fines
02:02of $1,100, which legitimate retailers say is so low, it's hardly a deterrent.
02:09If people get breached, they lose the counterfeit stock or the illegal stock, they pay the small
02:15fine if they get the fine and continue on.
02:18So to me, that says a lot.
02:23James Martin is a Deakin University criminologist.
02:26Overwhelmingly, the thing that's fueling the black market is excessively high cigarette
02:31taxes, tobacco taxes.
02:33To help drive down smoking rates, the tobacco excise has been increased aggressively.
02:39It's now worth about $1.30 per cigarette stick, pushing the price of a packet of 25 to over $50.
02:47Black market cigarettes sell for half that price and they're being illegally imported
02:52in vast quantities.
02:54In 2018, 400 million cigarette sticks were seized at the border.
02:59Last year, it was $1.7 billion.
03:03When we're seeing smoking rates flatlining in this country, when we're seeing the increase
03:07in the black market, these are signs that the policy isn't working.
03:12As the black market grows, it's also punching a multi-billion dollar hole in the federal
03:17budget with revenue consistently falling well short of Treasury forecasts.
03:23It is not being driven predominantly by people quitting smoking, but rather by people switching
03:27to the black market.
03:28I think the tobacco tax excises are well past their point of effectiveness.
03:33Victoria is at the epicentre of the tobacco wars.
03:37The tobacco store is engulfed in flames just metres from homes and apartments.
03:41Rival gangs vying for control of the lucrative market have firebombed dozens of stores.
03:48The state government can't tell the ABC how many tobacconists are operating there, but
03:53it has vowed to introduce a licensing regime by year's end.
03:57Most popular 20s is definitely these ones.
04:00It's a move Matt Evans hopes New South Wales will follow.
04:03I'm getting screwed over because I'm doing the right thing.
04:07Instead, he's watching as his profits go up in smoke.
04:11For more UN videos visit www.un.org
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