Governments across Canada in deficit while billions in tax revenue lost to organized crime

TORONTO, May 4, 2026 /CNW/ - Rothmans, Benson & Hedges Inc. (RBH), an affiliate of Philip Morris International Inc. (PMI), says the federal government has a $2.1 billion opportunity it missed in last week's Spring Economic Statement to strengthen public finances across the country by addressing Canada's contraband tobacco market.

The 2026 budget season has confirmed that all governments across Canada are facing significant fiscal pressures. At the same time, an estimated $2.1 billion in federal and provincial tobacco tax revenue is lost due to contraband sold by criminal organizations, according to a study conducted by KPMG LLP and commissioned by PMI. Highlighting the scale of this lost revenue estimated by the KPMG report, for the 2023-24 fiscal year, the federal government collected $2.6 billion in tobacco excise taxes according to the Parliamentary Budget Officer. Every provincial government, as well as the federal government, has tabled a 2026 financial document projecting a deficit.

Contraband tobacco is a national issue that spans provincial and international borders. The Canada Border Services Agency has confirmed that criminal networks attempt each year to smuggle large quantities of tobacco into Canada. Seizures by the agency are dramatically up from 547,000 KG in 2024 to 803,000 KG in 2025. Beyond cigarettes, seizures conducted by the agency include tobacco used by illegal manufacturing facilities for products supplying the black market.   Alberta has also identified manufacturing activity in Quebec and Ontario as a major source of contraband tobacco entering its jurisdiction.  In 2025, a major OPP operation with Six Nations Police, shut down a manufacturing facility on Six Nations of the Grand River Territory that resulted in 25 tonnes of tobacco seized.

A coordinated, federal‑led approach could help address the issue at multiple points along the criminal supply chain for this black-market, including border enforcement, illegal manufacturing, and interprovincial distribution networks. This approach could also support the sharing of best practices across provinces and ensure law enforcement agencies have the tools and resources they need to face their unique challenges in their respective jurisdictions.

Contraband tobacco has broader impacts beyond lost tax revenue. It affects public health outcomes, disadvantages businesses that operate legally, and contributes to organized criminal activity, including guns and drug trafficking, while increasing the risk of youth access to cigarettes.

Quotes

"Contraband is a national opportunity if solved, but in its current state represents a national problem needing federal leadership to redirect this lost tax revenue benefiting criminal groups to where it belongs, supporting programs and services for Canadians. By taking action now, to reduce the scale of this multi-billion dollar illicit market the federal government would help support reduced borrowing, lower long‑term debt and interest costs for itself and every province, and as a result benefit every Canadian not only now, but into the future." – Milena Trentadue, Managing Director, Rothmans, Benson & Hedges Inc.

"Federal leadership, coordination and intelligence could help nearly every law enforcement agency and provincial jurisdiction across Canada address the challenges with this national issue. Sharing best practices, tools and even challenges faced by provinces at a formal level with the federal government at the table should help fight back against this illegal trade" - Danny Fournier, Senior Manager, Illicit Trade Prevention, Rothmans, Benson & Hedges Inc.

About Rothmans, Benson & Hedges

Rothmans, Benson & Hedges Inc. (RBH), an affiliate of Philip Morris International Inc., is one of Canada's leading tobacco and nicotine companies and is working to deliver a smoke-free future. RBH is committed to sustainability and creating a positive impact on communities, the economy, and the environment. Currently, RBH employs nearly 800 people across the country, with its headquarters in Toronto and a factory in Québec City. Discover more about the company at https://www.rbhinc.ca/ and stay updated on RBH's transformation by following Twitter and LinkedIn.

SOURCE Rothmans, Benson & Hedges Inc.

Media inquiries: Brayden Akers, Manager, Media Relations and Issues (Canada), [email protected]