The Chair welcomed members. With a few new members, all introduced themselves.
The minutes of the last meeting - 8 August 2008 - were accepted without amendments.
Tax Office update
The Assistant Commissioner, Serious Non-Compliance (SNC) Peter Zdjelar thanked BATA for the intelligence provided. He continued with a summary of:
- a PIN project was conducted during August - November 2008. The results were:
- 18 successful purchases
- 11 PINS issued
- industry analysis of the Tobacco places its source as mainly overseas, probably Brazil although this would be difficult to substantiate
- the price range for chop-chop is $70-$80 per half kilo
- an aerial surveillance program was planned for March 2009
- 2008-09 Prosecutions
- A Victorian man was fined $2000 with a conviction recorded and a stay of six months to pay.
- A Victorian man was sentenced to 30 months imprisonment with 20 months total to be served. He was released on a $2000 Recognisance Order to be of good behaviour for 20 months.
- A NSW man was sentenced to six months imprisonment fully suspended and received a two year good behaviour bond.
- A NSW and was sentenced to six months imprisonment, fully suspended on entering a good behaviour bond for 12 months.
- A QLD man was sentenced to four months imprisonment, fully suspended on entering a good behaviour bond for 15 months.
Peter also discussed the issue of Night Scented Tobacco.
Australian Customs and Border Protection Service
Craig Sommerville stated that he had replaced Sharon Nyakuengama as National Manager Compliance Operations. He introduced his fellow members and passed on Peter White's apology (National Director Compliance).
He made the following comments:
- revenue and regulatory border controls are the key focus for Customs
- compliance (via their Risk and Strategy team based in Sydney) would be focusing on controls of illicit tobacco
- continued focus on self assessed clearance mechanisms
- continue to work closely with Excise - Tax Office in order to eradicate vulnerabilities. Also working on a project for dual license clients
- tobacco smuggling will continue to be a focus area.
Anthony Hogan distributed a paper re Illicit Cigarette and Tobacco Detection summary and made the following comments:
- five sea cargo importations of illicit tobacco were intercepted in Australia during the first half of the financial year with Indonesia (three detections), Philippines and China being the sources.
- there were nine detections of cigarettes in the sea cargo stream with China being a prominent source
- there were a total of 34 detections of tobacco and cigarettes in the air cargo stream (16) and postal (18) with 93% of all cigarettes being imported from China
- a total of 310kg of tobacco and 645,000 cigarettes were detected in the passenger stream during the reporting period.
Action item 1
Customs to distribute the previous Illicit and Tobacco Summary detection report to the secretariat.
Customs and Border Protection
Richard Janeczko made the following further comments:
- Tobacco is one of the border risk priorities we focus on with a high detection record.
- Molasses Tobacco -the increase of the rate saw increased detections.
- In the last calendar year Customs had 15 court actions completed with 100% success rate. Sentences ranged from good behaviour bonds to imprisonment.
- Entity based pro-active detections were discussed. Investigation groups were active for example, a detection was made in Perth but the goods were headed for Sydney/Victoria. Fifty containers were detected, six at the border with the remaining 44 detected thereafter.
- Identify fraud for smuggling that is, changes in container identity.
- Customs and Border Protection will continue to work with Tax Office, AQIS, State Police and Middle Eastern Crime Squad to leverage with each other in dealing with entities.
Australian Quarantine and Inspection Service
Rob McGahy made the following comments:
- AQIS was currently undergoing a restructure where in specific security services are being explored, with this to be finalised in a few weeks.
- Import permits - to import quarantine material. Currently there aren't arrangements for the import of tobacco. They are implementing an import permit requirement for tobacco. In addition to this is the treatment of tobacco seed as being a restricted import substance.
- Tobacco being imported needs a permit.
- AQIS has a range of testing facilities at Eastern Creek.
Note: Tax Office to consider the possible utilisation of this testing equipment.
The chair stated that Health had provided a document related to the Intergovernmental Body (INB) (distributed prior to meeting) to all members. This can be discussed further at future meetings.
Philip Morris Limited
James Arnold stated there was no additional update. There was an interest in the National Preventative Health Taskforce report. He will provide a link to forum members for draft material to support interim report.
Errol McMahon made the following comments:
- Discounting of brands as evidence of potential illicit supply. Procedures for retailer sign off that they are not engaged in illicit supply.
- Continue to supply details of duty free sales to Tax Office and Customs on a monthly basis.
- Tax Office request around duty free customers.
- Evidence of 'spikes' when pressure on a certain customer.
Action item 2
Tax Office, Customs and Border Protection and industry to develop a case study around illicit trade. Customs and Border Protection representative to be Doug Greaves.
Tax Office, Customs and Border Protection and industry
Outlined their pack collection survey results from sporting events. Distributed a paper from United Kingdom (UK) to show their results and calculations.
British American Tobacco Australasia
Barry Wilson discussed the following:
- Discussed the focus on educating retailers.
- 700 purchases with 200 hits, all based on intelligence received. Primarily in Sydney and Melbourne. 130 counterfeit brands. Quite easy to detect as it is not labelled as those sold over the counter.
- 50 retailer prosecutions for selling counterfeit goods with damages being sought.
- Customs to consider discussing with industry the intelligence received from results of investigations around counterfeit brands.
Action item 3
Customs to consider means of information sharing with industry with respect to counterfeiting.
Customs and Border Protection
- Sydney - there has been more success with counterfeit brands.
- Melbourne - more success with chop chop.
- There has been a reduction in consumer complaints.
- Internet sales - investigating cheap internet cigarettes. Site is still running. www.cheap.cigarettes.com.au and www.cheapnet.cigarettes.com.au
- BATA concentrated on public awareness for possible counterfeit. Flyers sent to 9000 retailers with only five irate calls. Barry offered to circulate outcomes of AIT dialogue.
Action item 4
Circulate to members the outcomes of the AIT dialogue.
Brian Fitzgerald asked the forum what the impact of the global downturn has had on the industry.
The following comments were made:
- It is a little too early to tell at the moment with volumes appearing stable.
- Down trading through brands may accelerate.
- Question was raised re increase in the illicit market - comment made if excise is increased then there could be a corresponding increase in the illicit market.
- Concern raised re the reduction in resources in Tax Office/Customs.
Barry Wilson discussed:
- Two types of testing via CSIRO - being able to trace the origin of tobacco
- New Zealand and Canada have changed their legislation defining Tobacco. Tax Office will consider the need for a similar change.
Action item 5
Tax Office to consider whether a change to its definition of tobacco is required.
General discussion was held in relation to the Preventative Health Task Force, including advertising for tobacco products throughout Australia and retail trade bands, and also potential impacts on the illicit market from outcomes of the Preventative Health Task Force and the Henry Review.
Brian Fitzgerald thanked the Forum members for their attendance and comments.
To be held in six months.
Last Modified: Wednesday, 27 June 2012