BC tax grab will drive smokers to illegal market

BC smokers paying $10 more per carton than six months ago

MONTREAL, Feb. 19, 2014 /CNW Telbec/ - Imperial Tobacco Canada, the country's leading legal tobacco manufacturer, says the BC government is once again ignoring the law of unintended consequences with its latest tobacco tax hike, announced in yesterday's budget. As of April 1, 2014, the price of legal cigarettes in British Columbia will climb by $3.20 a carton. When you add-up the recent federal increase of $4 and BC's previous increase of $2 in October 2013, this is almost $10 a carton more that British Columbia smokers are paying in only six months.

"The BC government is being greedy and it will come back to bite them when consumers run to the illegal tobacco market," said Eric Gagnon, Director of External Affairs for Imperial Tobacco Canada. "BC is in the enviable position of having the lowest smoking rate in Canada and among the lowest rates of illegal tobacco sales. However, the smuggling picture in the West is changing rapidly as counterfeit cigarettes enter the province by sea from Asia and smugglers, well-established in Quebec and Ontario for years, expand their networks westward. The Pacific Ocean and the Rocky Mountains are no protection against illegal tobacco. In fact, they are the conduit and higher taxes will only make a bad situation worse."

In a 2010 study, titled Tax Policies and Black Market Incentives, BC's Fraser Institute concluded that, "While tobacco taxes clearly reduce lawful tobacco sales, their impact on smoking prevalence is less clear, especially when the effects of other anti-smoking initiatives are taken into consideration. What is clear is that while several factors have facilitated the exploding contraband tobacco trade in Canada, increases in tobacco excise taxes were the spark that ignited the explosion." Also in 2010, the RCMP and the Canada Border Services Agency made one of the largest illegal cigarette busts in Canada when fake brands, with an estimated street value of $10 million, were seized at a Richmond port. According to police, the contraband cigarettes were made with little or no quality control.

"Over the past decade, BC has done an admirable job of addressing the health risks associated with smoking. But with tobacco taxes already high enough to have smokers looking for unregulated sources, attempts to justify further increases on the basis of health are stretching credibility to the breaking point. These are nothing more than transparent tax grabs whose primary victims are Mom-and-Pop convenience stores that are, by far, the major retail sources of legal tobacco in this country," said Gagnon.

SOURCE: Imperial Tobacco Canada

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Sebastien Dolan
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