Government 'losing $1.4bn' in revenue to illicit tobacco trade

Authorities would have their head in the sand to ignore the major problem of illegal tobacco, cigarette giants say.

Officials from Imperial Tobacco Australia will use a parliamentary inquiry into the illicit trade of tobacco products to push for a formal recognition of the scourge.

The hearing in Canberra will examine how widespread the problem of home-grown and illegal, counterfeit and unbranded tobacco imports is.

Representatives from tobacco giants Philip Morris and British American Tobacco are also set to appear.

Imperial Tobacco says that up to one in seven tobacco products consumed in Australia is illicit.

That's about $1.42 billion in lost revenue for the federal government.

"Ignoring illicit tobacco ... is a head in the sand approach that merely serves to encourage the organised crime gangs that federal agencies acknowledge are the primary perpetrators," Imperial's head of corporate and legal affairs Andrew Gregson said.