Increasing tobacco taxes will fuel an illegal market that is already stealing millions of dollars from New Brunswick coffers
MONTREAL, March 28, 2013 /CNW Telbec/ - In raising taxes on legal tobacco products in its latest budget, the second increase since 2011, the New Brunswick government has ignored the sale of illegal tobacco and invites illegal traffickers to increase their stake of the province's tobacco market.
"We understand that the government is looking for a quick way to fill its coffers but raising tobacco taxes is not the solution," said Caroline Ferland, vice president, Corporate and Regulatory Affairs, Imperial Tobacco Canada. "It will drive more smokers to illegal, untaxed sources and the government will not reap the financial reward it expects."
Government revenues from tobacco taxes will be $15 million lower than expected in 2013. Hoping that the recent increase will compensate for this gap is not taking into consideration today's contraband problem and is wishful thinking by the province.
Minister of Finance Blaine Higgs increased the price of a carton of cigarette (200 cigarettes) by $4 earlier this week and said "tobacco taxes are an important tool that governments can use to help discourage smoking and pay for additional costs smoking imposes on the province's health care system."
"This government refuses to face the inconvenient truth that high taxation has unintended consequences. It deters the purchase of highly regulated, legally produced cigarettes and fuels the market with cheap, uncontrolled tobacco products manufactured and distributed by criminal groups," said Ms. Ferland.
The majority of contraband cigarettes originates from illegal manufacturing operations located in Ontario and Quebec. They are produced in facilities that are unlicensed, unregulated and uninspected. Because they are sold without any taxes, they are purchased illegally for a fraction of the price of the legal products. This is in sharp contrast to the highly regulated and taxed legal industry.
SOURCE: IMPERIAL TOBACCO CANADA
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