Tobacco company sees attempted $50 billion cash grab by Ontario as political stunt, unrelated to addressing alleged health concerns
MONTREAL , Sept. 29 /CNW Telbec/ - Imperial Tobacco Canada is stunned that a province in which close to 50 per cent of tobacco products purchased are illegal is targeting the legal industry while continuing to turn a blind eye to illegal tobacco sales.
"We find it unbelievable that the Government of Ontario - a senior partner in the tobacco industry for more than 50 years - would use taxpayers' dollars to sue legal tobacco companies rather than invest in eliminating the contraband market which, today, accounts for almost 50 percent of the cigarettes purchased in Ontario," said Donald McCarty, Imperial Tobacco Canada's Vice President of Law.
Recent studies have shown that the huge increase in illegal cigarettes in Ontario seems to have ended the thirty year decline in smoking rates, and signal an increase in the amount of youth smoking illegal cigarettes.
"Why isn't the Ontario government going after the illegal manufacturers with the same zeal that it goes after the legal industry?" added Mr. McCarty .
In launching its suit against tobacco companies, the Ontario government may wish to show voters that it is taking action on health care but, in reality, years of legal wrangling with regulated tobacco companies will do nothing to stem the tide of cheap and prevalent illegal tobacco products.
Ontario, like the federal government and all provincial governments, has known of the health risks associated with tobacco use for decades. The Government of Ontario will spend millions pursuing the legal companies that it regulates in what will ultimately be an unsuccessful grab for an even higher share of the industry's profits.
"We manufacture a legal product that is subject to unreasonably high taxation and we do this within tightly regulated parameters that are set by governments, including Ontario. In the fiscal year 2009, the government of Ontario pocketed more than $1 billion in taxes on the sale of tobacco products. It will continue to profit from tobacco sales even as it pursues an additional cash grab through the courts. This action is hypocrisy of the highest order and should be exposed as such," said Mr. McCarty . "This action is even more hypocritical when one considers the major role played by the Government of Ontario and the governments of other provinces in the sale of other products for which the risks are well known, including alcohol and gambling."
Mr. McCarty added that Imperial Tobacco Canada will defend itself vigorously against Ontario's suit.
A release published by the Auditor General of Ontario in December 2008 stated that the province lost more than $500 million in uncollected tobacco taxes in 2007-2008 due to contraband Imperial Tobacco Canada estimates this number to be $1 billion today. Ontario is a world leader in illegal tobacco and has higher rates of contraband than such countries as Nigeria and Pakistan . Legal tobacco production in Canada is a highly regulated industry subject to over 200 laws and regulations, with provincial and federal regulators closely monitoring the industry and collecting billions in revenue.
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