At least three stores The Courier investigated sold “illicit whites”, branded cigarettes that are legally produced in other countries but smuggled into Australia without legal distribution or the payment of tax.

Also sold in Ballarat is what is known as “chop chop” – cut loose tobacco that is grown sold without legal distribution or tax.

It is incredibly easy to buy either type of illegal smoking product in Ballarat.

The Courier purchased a 100-packet of cigarettes sold inside a Gizeh box from one establishment, a 100-pack of cigarettes sold inside a Ventii box from another shop, and a 20-pack sold inside a Yee Yee box from a third store.

Each were put into small black plastic bags by the store clerks.

The packs of 100 cigarettes cost $33 each, while the 20-pack cost $10.

When you compare that to the price of legally-distributed cigarettes, it’s easy to see why Ballarat has a strong market.

While in 2000, a 30-pack of Peter Jackson cigarettes was only $8.41, they jumped up to $14.45 in 2010, but are now sitting at $27.25 per packet.

That’s a difference of more than 90 cents per cigarette for legal cigarettes compared to 33 cents per cigarette for the illegally-imported versions.

The stores selling these products are located across the city and are typically set up as “gift stores” with ornaments and toys in the windows, but with sparse interiors with a simple counter and clerk setup, often selling smoking devices or cold drinks.

Ballarat’s illegal tobacco and cigarette trade is only one case in what is a much wider problem across the country.

Australia has strict laws for the selling and branding of cigarettes. Since December 2012, all forms of branding, colour and logos have been removed - with health warnings printed on the boxes instead.

The repercussions for vendors selling illegal cigarettes – usually small gift stores, tobacconists, grocers and newsagents like the ones in Ballarat – can be huge.

Fines for selling illegal smokes were quadrupled in 2014. Individuals face fines of $34,600 and businesses $173,200.

Illicit whites and chop chop are doing a roaring trade in Ballarat, but the city is only a small part of a bigger problem.

The high cost of legal cigarettes and ever-increasing excises has stoked the fires of an industry now costing the federal government $1.49 billion in lost tax revenue annually.

According to the biennial independent KPMG report, Illicit Tobacco in Australia, during the 12 months to June 2015, 2.4 million kg of illegal tobacco was consumed in the country, a huge proportion of the 17.4 million kg of tobacco in total.

The Department of Immigration and Border Protection oversees Australia’s Tobacco Strike Force Team, which was set up in October last year to seize illegal cigarettes like the ones sold prolifically throughout Ballarat.

“Tobacco is one of the most highly taxed commodities in Australia (and across the world) and because of that, it is attractive to serious and organised crime and is one of the world’s most smuggled illegal goods,” a departmental spokesperson said.

“Organised crime syndicates smuggle their products to avoid paying revenue, this allows them to sell the cigarettes at a lower price and generate large illicit profits.”

The spokesperson said the federal government took a grim view to smuggled tobacco, with the Strike Team having already identified a number of criminal syndicates suspected of trading illegally.

“The maximum penalty for tobacco smuggling is 10 years’ imprisonment. Penalties of up to five times the amount of duty evaded can also be imposed by the courts,” the spokesperson said.

Tobacco Strike Team investigators have so far seized more than 25 tonnes of smuggled tobacco and 50 million smuggled cigarettes.