Massive tax increase undermines investment to fight contraband

Any sum of money to address illegal tobacco is useless if the Government of Canada fails to shut down the 50 illegal factories and over 300 illegal smoke shacks

MONTREAL, Feb. 12, 2014 /CNW Telbec/ - In raising taxes on legal tobacco products in its latest budget, the Canadian government has laid down a red carpet for organized crime to continue its quest to take over the Canadian tobacco market.  At the same time, this increase undermines the positive measures it has put in place to fight contraband tobacco, such as the new mandatory minimum sentences for repeat contraband offenders and a budget commitment to invest $91 million to address this ongoing crisis.

"While we appreciate the investment to fight contraband, this huge tax increase undermines all efforts at eliminating the illegal tobacco trade in Canada. Unless the government has the political will to address the source of the problem, all other initiatives are meaningless," said Eric Gagnon, Director of Corporate Affairs, Imperial Tobacco Canada. "Without that political will, this is a short sighted cash grab that will not reduce tobacco consumption and only benefit the 175 criminal organizations running the illegal tobacco trade across Canada."

Canadian governments are already losing hundreds of millions of dollars every year due to illegal tobacco sales and the Federal tax increase will have serious economic and social impacts on provinces across the country. According to the RCMP there are more than 300 smoke shacks in Canada, with more opening each month, and 50 illegal tobacco factories ready to meet the increased consumer demand this tax increase will generate.

"No matter how you sugar coat it, this tax increase by the Conservative government goes against their promise of 'no new taxes on Canadians', and completely contradicts their 'tough on crime' agenda. To try and offset the impact of this tax increase, the Federal Government has to immediately use the new funds set aside to fight contraband and take further meaningful and decisive measures to finally eradicate illegal tobacco in Canada, including the blatant manufacturing and sale of illegal tobacco on Canadian soil," concluded Mr. Gagnon.

We understand that the government is looking for a quick way to generate revenue from a small segment of the population, yet history has clearly shown the serious unintended consequences of excessive taxation while such a huge illegal network flourishes in Canada. Rather than resulting in additional revenue, raising tobacco taxes will drive more smokers to illegal, unregulated, and untaxed sources, undermine all efforts at tobacco control, and invite criminal networks to further infiltrate Canadian communities.

SOURCE: Imperial Tobacco Canada

For further information:

Eric Gagnon
Director, Corporate Affairs
514-932-6161 ext: 2222

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