HST set to give Ontario organized crime groups big spike in profits

Without action, HST will make cheap, untaxed illegal tobacco even cheaper

TORONTO, May 17 /CNW/ - One out of every two cigarettes in Ontario is illegal and being trafficked by organized crime groups. The Ontario Convenience Stores Association (OCSA) is now warning that if the HST is introduced as planned on tobacco products, it will cause tobacco prices to spike by 8% and divert millions more in taxes to organized crime groups. Currently tobacco sales are exempt from Ontario's 8% Provincial Sales Tax (PST) because a Provincial Tobacco Tax (PTT) is added to the product instead.

Members of the Association met today at Queen's Park to deliver a 4,000 name petition from retailers all across the province to the McGuinty Government to ask that temporary measures be taken to prevent this from happening. This follows over 5,000 postcards sent to Queen's Park by convenience store owners, workers and customers earlier this year.

"With organized crime groups controlling nearly 50% of all tobacco sales in Ontario, bringing in the HST without changes will be like throwing gasoline on a fire," said Dave Bryans, President of the Ontario Convenience Stores Association. "We're asking the government to temporarily lock-in existing high cigarette prices by reducing Provincial Tobacco Taxes (PTT) until it takes action and reigns in the contraband cigarette problem."

"Toronto Police Chief Bill Blair has told me that contraband tobacco is the stock and trade of organized crime, and the money it generates is used to buy the guns and drugs that are threatening our neighbourhoods," said Peter Shurman, MPP, Thornhill. "When you add another 8% tax to legal cigarettes on July 1st, it doesn't take a rocket scientist to figure out what that's going to do. If you let HST increase the profit from contraband tobacco, you're going to see a direct increase in drugs and guns on our streets."

In a recent presentation to the Peterborough County-City Health Unit board meeting, Michael Perley, Director of the Ontario Campaign for Action on Tobacco noted "The provincial (tobacco control) strategy is based on price, so if we raise the price any more the sale of contraband cigarettes will increase." The OCSA concurs and believes any further increases in tobacco prices will undoubtedly worsen the spread of illegal cigarettes in Ontario.

Studies have shown that the prevalence of contraband tobacco is rapidly growing in Canada - particularly in Ontario. The spread of illegal cigarettes has circumvented government restrictions on the responsible sale of tobacco products and has done particular damage undermining youth anti-smoking initiatives. In particular, a 2009 study by the Canadian Convenience Stores Association of Ontario high schools found that 30% of the cigarette butts found around school grounds were contraband tobacco. More detail on the study can be found at www.stopcontrabandtobacco.ca.

SOURCE Ontario Convenience Stores Association

For further information: For further information: Media inquiries: John Perenack, perenack@primestrat.com (quick response), (416) 238-2576

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Ontario Convenience Stores Association

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