The tobacco industry has attacked government plans to hike the excise on cigarettes, saying it will hit the hip pocket of more than three million smokers and cause illegal sales to flourish.
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Labor has announced plans to lift the cost of cigarettes by 12.5 per cent a year for the next four years to raise an expected $5.3 billion, in an effort to find budget savings ahead of the election.
While health groups have been unanimous in their praise for the tax hike, British American Tobacco Australia believes it will be a boon for the tobacco black market.
Spokesman Scott McIntyre says the 2010 tax increase saw the trade in illegal tobacco by organised crime gangs soar to "record levels".
"The Australian Crime Commission said just two days ago that organised crime groups see illegal tobacco as a low-risk high-profit activity - they see it as a market where large profits can be made with minimal detection," Mr McIntyre told AAP.
"The government has just made their jobs easier and their profits bigger.
"It hits smokers in the hip pocket while it lines the pockets of organised criminals."
According to the Australian Crime Commission report, 46 sea cargo importations of illegal tobacco, comprising 175 tonnes of tobacco and 122 million cigarettes, were seized last year.
The duty evaded on intercepted shipments was $128 million.
"Organised crime has sustained access to cheap tobacco product overseas, which can be illegally imported, avoiding tax obligations, to supply the illegal tobacco market in Australia," the report states.
"Minimal quantities of illegal tobacco are produced domestically."
Mr McIntyre also warned government that the country's smokers would have the tax hike in mind when they entered the polling booth.
"There are over three million poor smokers who will now have to pay for this government's financial mismanagement," he said.
"We all know that everyone is feeling the pinch currently, but three million plus smokers are sure to remember the price hike every time they pull out their cigarettes in the lead-up to the election."
