Increasing tobacco taxes will fuel an illegal market that is already
stealing millions of dollars from New Brunswick coffers
MONTREAL, March 28, 2013 /CNW Telbec/ - In raising taxes on legal
tobacco products in its latest budget, the second increase since 2011,
the New Brunswick government has ignored the sale of illegal tobacco
and invites illegal traffickers to increase their stake of the
province's tobacco market.
"We understand that the government is looking for a quick way to fill
its coffers but raising tobacco taxes is not the solution," said
Caroline Ferland, vice president, Corporate and Regulatory Affairs,
Imperial Tobacco Canada. "It will drive more smokers to illegal,
untaxed sources and the government will not reap the financial reward
Government revenues from tobacco taxes will be $15 million lower than
expected in 2013. Hoping that the recent increase will compensate for
this gap is not taking into consideration today's contraband problem
and is wishful thinking by the province.
Minister of Finance Blaine Higgs increased the price of a carton of
cigarette (200 cigarettes) by $4 earlier this week and said "tobacco
taxes are an important tool that governments can use to help discourage
smoking and pay for additional costs smoking imposes on the province's
health care system."
"This government refuses to face the inconvenient truth that high
taxation has unintended consequences. It deters the purchase of highly
regulated, legally produced cigarettes and fuels the market with cheap,
uncontrolled tobacco products manufactured and distributed by criminal
groups," said Ms. Ferland.
The majority of contraband cigarettes originates from illegal
manufacturing operations located in Ontario and Quebec. They are
produced in facilities that are unlicensed, unregulated and
uninspected. Because they are sold without any taxes, they are
purchased illegally for a fraction of the price of the legal products.
This is in sharp contrast to the highly regulated and taxed legal
SOURCE: IMPERIAL TOBACCO CANADA
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