OTTAWA, Jan. 15 /CNW Telbec/ - Health groups have identified a source for
more than a billion dollars in annual federal revenue and have developed a
plan for the government to recoup the money. The source is unpaid tobacco
taxes and the plan is to get the contraband tobacco market under control. The
Canadian Coalition for Action on Tobacco, which includes many of Canada's
largest health charities and health professions, has presented this plan to
"In this time of economic recession, a time when governments are
desperate for revenue, it is critical that the government recover over a
billion dollars in unpaid tobacco taxes," said Garfield Mahood, Executive
Director of the Non-Smokers' Rights Association. Contraband cigarettes sell
for as little as $6 per "baggie" of 200, compared to the average retail price
of $50-$70 for a carton (with all federal and provincial taxes paid) in
Ontario and Quebec, the provinces with the lowest tobacco taxes in all of
The federal government is losing an estimated one billion dollars per
year in unpaid tobacco taxes. Moreover, the Ontario Auditor General reported
in December 2008 that Ontario is losing an additional $500 million annually.
When you consider the fact that the federal, Ontario and Quebec governments
have stopped increasing tobacco taxes out of concern for the contraband
market, the actual losses are much greater.
High cigarette prices, achieved largely through federal and provincial
tax increases, are widely recognized by researchers and government officials
as the single most important means of reducing smoking. "Because of the
widespread availability of cheap contraband tobacco, progress in reducing
tobacco use in Canada has halted and smoking rates have flatlined at 19% for
2005, 2006 and 2007 according to the Canadian Tobacco Use Monitoring Survey,"
stated Rob Cunningham, Senior Policy Analyst with the Canadian Cancer Society.
"The primary beneficiaries of contraband tobacco are the illegal
manufacturers and the criminal networks they supply," insisted Cunningham.
"While many Canadians may not appreciate the gravity of the illegal tobacco
market, in fact, all Canadians end up paying-in lost federal and provincial
government revenues, revenues that could be used to fund valuable government
programs; and in more young people starting to smoke and fewer smokers
quitting, which translate into much higher health care costs in the short-,
medium- and long-term."
The RCMP has identified the major source of contraband cigarettes as the
St. Regis (American) side of the Akwesasne Reserve. The other key sources are
from illegal manufacturing operations on Kahnawake (near Montreal, Quebec),
Tyendinaga (near Belleville, Ontario) and Six Nations (near Brantford,
Ontario). "Contrary to popular belief, getting contraband under control does
not require enforcement on-reserve," emphasized Louis Gauvin, Spokesperson for
the Quebec Coalition for Tobacco Control. "What it does require, however, is
Health groups are calling on Prime Minister Harper to control the
contraband trade and safeguard Canada's hard-won progress in reducing tobacco
Health groups are urging the government to put in place a comprehensive
plan to address the contraband tobacco problem which includes the following
1. Ensure that the federal government persuades the U.S. government to
shut down the illegal, unlicensed factories located on the U.S. side
2. Prohibit the supply of raw materials (including raw leaf tobacco,
cigarette packaging, cigarette filters, and cigarette paper) to anyone
without a valid tobacco manufacturer's licence.
3. Establish a minimum bond of at least $5 million to obtain a federal
tobacco manufacturer's licence.
4. Revoke licences of manufacturers acting illegally, including for
violation of provincial laws.
5. Establish a full tracking and tracing system to monitor product
shipments and identify points of diversion into the illegal market.
6. Promote with First Nations the benefits of implementing a First
Nations tobacco tax equal to the provincial tobacco tax.
7. Increase penalties substantially, to serve as a more effective
deterrent to participation in the contraband tobacco trade.
For further information:
For further information: Francois Damphousse, Non-Smokers' Rights
Association, (514) 237-7626; Rob Cunningham, Canadian Cancer Society, (613)
565-2522 ext 305