Tobocco tax hike will "boost smuggler profits"

Customs service national manager for investigations Richard Janeczko said it was "obvious" that further hikes on tobacco excise would make illicit importation more lucrative.

The government is reportedly considering progressively increasing the price of cigarettes to $20 for a packet of 30. The proposal has been enthusiastically endorsed by the health industry, which argues that disadvantaged groups are more likely to drop the habit if the price goes up.

Mr Janeczko said an increase in tobacco tax would effectively increase the return made by smugglers, whose profit derived from dodging the excise.

"If you ask me, 'will they make more money if they smuggle stuff in when it's 10 per cent higher', obviously, just the logic says they're going to make 10 per cent more profit if they get in," he told The Australian.

Mr Janeczko warned that, with greater profits to be made, there was a possibility of more illegal shipments from both existing criminal gangs as well as new entrants attracted by the high returns.

All told, the illegal importations represented $185 million in tax evasion, not including GST.

Mr Janeczko has previously said the market for illegal tobacco is beginning to rival the illicit drug market. There have also been reports from overseas law enforcement agencies linking the proceeds of tobacco smuggling to terror funding.

Last year, Mr Janeczko said it was believed the Lebanese crime groups responsible for tobacco importation and distribution in Australia had links to Middle East terror groups.