Confirmation of the boost to the illicit trade as a result of the plain packaging of tobacco has been revealed in a new KPMG report, released in Australia.

The study – Illicit Tobacco in Australia - shows the illicit tobacco market is now at 13.3% of total consumption – up from 11.8% in the previous year, and at the highest rate ever recorded. The report shows that this not only costs the Australian Government AUD1bn annually in lost excise revenue, but it is also costing Australian retailers - 67% believe they have been impacted by the illicit trade since plain packaging has been introduced.

Brian Madderson, chairman of the Petrol Retailers Association, said “I can only hope the Government here takes an honest look at this alarming report. This policy was not properly thought through in Australia and as a consequence it is costing retailers, costing the Australian economy and fuelling the illicit tobacco trade.”

The report follows independent research - The Impact of Plain Packaging on Australia Small Retailers - released by the Australasian Association of Convenience Stores nine months after the introduction of plain packaging in Australiam - which showed that there was no evidence to suggest smoking rates have gone down as a result of Australia’s plain packaging law. Instead, two-thirds of small retailers are saying plain packaging has negatively impacted their business – suffering from increased operational burdens as well as a result of the increased illicit trade.

Madderson said: “With the latest official figures here showing the illicit tobacco market already cost the UK Government almost £3bn in 2012-13, £500m more than the previous year, petrol retailers are understandably extremely concerned about the impact of further regulations on their businesses. The UK Government says it is still actively considering plain packaging and the Scottish Government says it is planning to implement this policy in 2014/15. On behalf of our members I would strongly ask them to pause and thoroughly review the wider, detrimental impacts it will have before it is too late. The worthy aim of reducing smoking can be much better achieved through education rather than unproven and excessive regulations which threaten the livelihoods of independent retailers.”