Canberra, May 3 (IANS): The illegal tobacco trade is costing Australian government more than 1.6 billion Australian dollars ($1.2 billion) in tax, according to a Wednesday report.

Illegal tobacco sales comprise 13.9 per cent of all tobacco consumption, which have cost the government more than a billion dollars loss in tax revenue, Xinhua news agency cited the "Illicit Tobacco in Australia 2016" report released by auditing firm KPMG as saying.

The report said 2.3 million kg of illegal tobacco was consumed by Australians last year in the form of illicit cigarettes or loose leaf tobacco commonly known as "chop chop".

It also recommended a national strategy to combat the issue, which was also backed by representatives from the local tobacco industry.

The Australian government in 2016 announced a grant of 7.7 million Australian dollars ($5.8 million) for the Australian Border Force (ABF) to combat organised illegal tobacco crime syndicates.