Smoke tax to fire up smugglers: retailers

A retail group is urging the government to back off on tobacco excise increases in the budget next week, claiming it would only encourage smugglers.

Alliance of Australian Retailers general manager Chiang Lim says that's because tobacco in Australia is the most expensive in the Asia-Pacific region.

He said a pack of 20 Marlboro cigarettes cost AUD$23.65 in Australia, AUD$3.20 in China, AUD$1.59 in Indonesia and AUD$0.72 in Myanmar.

"Proposing even more increases in tobacco excise taxes will further propel Australia as the destination market of opportunity for illegal tobacco smugglers, given the massive price differences between Australia and other countries," he said in a statement.

Mr Lim said Australian Border Forces successes in seizing 221 tonnes of illicit tobacco in 18 months to December 2015 showed just how profitable this trade is.

"Small business retailers need the Australian governments to support them and stop illicit tobacco, not introduce even more taxes that only help illegal tobacco traders to prosper at others' expense," he said.

That follows release of the latest Illicit Tobacco Report for 2015, prepared by KPMG for the tobacco industry, which says the Commonwealth is missing out on almost $1.5 billion in tobacco excise revenue through sale of illegal smokes.

Australian Border Force says it's successfully cracking down on tobacco smuggling with a man jailed for two and a half years this week for trying to import 17 tonnes of tobacco leaf.

In the latest bust this week, the ABF Tobacco Strike Team seized 13 million smuggled cigarettes, more than eight tonnes of loose tobacco and $1.7 million cash in raids in Melbourne.

Immigration Minister Peter Dutton said the sale of these products not only funded organised crime but diverted money from government programs.

"The Australian community should be aware that we are successfully disrupting the supply of illicit tobacco and dismantling the criminal syndicates that support it," he said in a statement.