Nova Scotia not immune to contraband tobacco - Cigarette tax hikes shown to drive adult smokers to illegal markets

MONTREAL, April 9, 2015 /CNW/ - While the Province of Nova Scotia may believe that raising taxes on cigarettes will help its ailing bottom line, organized crime is far more likely to be the beneficiary of this misguided budget-balancing measure, says Imperial Tobacco Canada, the country's largest manufacturer of legal tobacco products.  

Caroline Ferland, Vice President Corporate and Regulatory Affairs for Imperial Tobacco Canada, says her company understands that tobacco taxation is an important revenue stream for governments but cautions that tax 'shocks' increase the price gap between legal and illegal products, creating a larger incentive for adult smokers to turn to the contraband market.

Today, the major centers of the illegal tobacco trade in Canada remain Quebec and Ontario, where contraband constitutes up to 40 per cent of the tobacco market.  The Atlantic Provinces are not immune to the contraband problem, a survey conducted last June by the Atlantic Convenience Store Association (ACSA) show that contraband levels in Nova Scotia have surpassed 30% in some locations. 

In Canada, history has repeatedly shown each tax increase on legal tobacco products to result in an increase in illegal tobacco activity. "Sky-high tobacco taxation is a gift to organized crime in attracting smokers, particularly youth, to the illegal and unregulated market.  The black market goes where the opportunities are, and today's increase certainly provides that opportunity for traffickers already established in Nova Scotia." says Ferland.

Ferland suggests that governments should be cautious about associating a decrease in reported sales of legal cigarettes with a decrease in the adult smoking population as opposed to a rise in contraband tobacco usage.  "By over-taxing the legal tobacco trade, governments put their own public health and financial objectives at risk and promote the growth of a flourishing criminal industry," she says.

SOURCE Imperial Tobacco Canada

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