From the glittering skyline of Dubai to the modest streets of Hervey Bay, Queensland, a complex web of illicit tobacco trade is challenging Australian authorities. At the center of a recent crackdown is Mohammed Alfalahi, a 36-year-old Dubai-based operator accused of running a flagrant network of illegal tobacco shops. His case exemplifies a broader, systemic issue facing regulators: while fines for selling black market tobacco have skyrocketed, collecting them—and actually stopping the trade—is proving to be a far more difficult task.
The Cost of Doing Business?
According to Queensland Health court documents, Alfalahi operated five illicit tobacco stores in regional Queensland, using encrypted messages and visiting Australia only intermittently. When authorities raided his shops, seizing thousands of illicit cigarettes, he was repeatedly hit with fines. Under the previous penalty regime, these fines—often around $3,000—were seemingly treated as a mere "cost of doing business." Queensland Health noted in a court submission that the commercial benefits of the illicit trade appeared to far outweigh the intended deterrent impact of these penalties.
In response to this brazen disregard for the law, Queensland dramatically increased fines in April this year. Penalties for individuals jumped to approximately $32,000, and for companies, up to $161,000. Alfalahi himself was hit with a two-year court ban on selling tobacco in October, risking contempt charges if he continues. Yet, the financial data reveals a troubling gap between enforcement and collection.
The Collection Dilemma: Millions Owed, Fraction Recovered
An ABC investigation has uncovered that while Queensland Health issued a staggering $73.3 million in fines for smoking law breaches between January 2024 and mid-October, only a fraction has been paid. Offenders paid just $3.6 million within the initial 28-day period. The bulk of the debt was passed to the State Penalties Enforcement Register (SPER), which has managed to recover only $11.7 million in cash out of $54.9 million referred to it—a collection rate of just 21.2%, significantly lower than the average for other fines like speeding tickets.
Several factors complicate debt recovery. The sheer size of the new fines makes repayment less likely, and the illicit nature of the business means operators often use fake identities or "patsy" owners to shield themselves. While SPER has employed aggressive tactics, including seizing bank accounts and even impounding a $200,000 luxury car, the industry remains resilient.
A Booming Black Market
The illicit tobacco trade is fueled by high demand, driven in part by the soaring cost of legal tobacco in Australia. With a pack of 20 legal cigarettes now costing nearly $40 due to heavy federal taxes, the black market offers a tempting alternative. Illicit packs can be found for as little as $8 to $10, a price point that keeps customers flowing into shops even after raids and temporary closures. One store in Brisbane's west, raided in September, was reportedly back in business within weeks, selling cheap illegal cigarettes to a steady stream of buyers.
The scale of the problem is immense. The Australian Criminal Intelligence Commission estimates that nearly $3.3 billion in excise revenue was lost to the illicit tobacco trade in the 2024 financial year alone. Authorities are seizing massive quantities of contraband—almost 418,440 illicit cigarettes were taken from Alfalahi-linked stores in June alone—but the market continues to blossom.
The Road Ahead: Coordination and Harm Reduction
Experts like Dr. Samuel Brookfield from the University of Queensland's School of Public Health argue that while increased powers and fines are necessary, they must be matched with adequate resourcing and better coordination between agencies like the Australian Border Force, Federal Police, and state health departments. He cautions that it is too early to determine if the new, harsher penalties will be effective in the long term.
Dr. Brookfield also emphasizes the need for a balanced approach that avoids the pitfalls of a "war on drugs" style crackdown. He suggests that enforcement should be coupled with harm reduction measures, such as robust quitting programs for smokers. Ultimately, curbing the illicit trade will require not just an "iron hand," but a strategy that addresses the economic drivers of the black market and supports public health objectives.
