Edward R. Myers
OTTAWA, April 9, 2015 /CNW/ - Aboriginal communities in Canada are passionate about their right to grow, use, and sell tobacco as a way of life and a means to their livelihood. No wonder then that last fall in a Senate committee room in Ottawa a First Nations delegation expressed outrage about the legislative process used to bring about the anti-contraband amendment to the Criminal Code, Bill C-10. They claimed, rightly, that the process did not include proper consultation with Canada's Aboriginal communities. The outrage was echoed along the 401 highway from Toronto to Ottawa as billboards exhorted the politicians to "Kill Bill C-10".
Bill C-10, however, is not the problem. It is not intended to target native groups at all. It is, instead, intended to target the 175 known criminal groups that use the sale of contraband tobacco to fuel criminal operations that threaten public safety and undermine provincial tax bases. To date, these criminal networks have looked on unstamped tobacco products – regardless of whether they come from reserves or elsewhere – as a rich source of revenue with little risk of attention from law enforcement.
Ironically, to date, most provincial governments have been complicit in propagating criminal activity as they raise tobacco taxes willy-nilly and ignore the consequences to public safety. Inevitably, history in Canada has shown that there is a price point for tobacco products that is super sensitive to illicit market forces. When governments try to take in revenue through "sin tax" hikes, criminal organizations are ready to jump in and supply the black market with cheap cigarettes.
Aboriginal communities across Canada have developed the capacity to compete with the legitimate cigarette industry both in terms of cigarette materials and production, if not in quality control. Even if they pay four or five times the price for raw leaf tobacco that legitimate industry pays, the final retail price to the consumer can be a fraction of the cost of stamped tobacco products where government taxes have been paid.
The diversion of raw leaf tobacco is ultimately an activity that attracts and sustains the involvement of organized crime. This reality is the main rationale behind to recent passage of Bill C-10. So, while the criminal prohibitions are now in place through that federal legislation, the supply side of the problem still needs to be fixed. In Southern Ontario, where virtually all Canadian tobacco crops are located, the 240 or so farmers growing tobacco can't be trusted to keep from diverting raw leaf to illegal manufacturers.
Recent regulations developed by the Ontario Ministry of Finance promise to effectively tighten up the controls around the management of tobacco production and distribution. However, upon first read of this legislation it clearly lacking in effectiveness and significantly less in authoritativeness than the now defunct Ontario Flue-Cured Tobacco Growers' Marketing Board. Furthermore, the big question is whether the province will back up the regulations with the human, technological, and financial resources needed to give effect to the rules and thereby stop fuelling organized crime through diverted tobacco. We'll keep an eye on that one!
Now it is time to finally reconcile with the Aboriginal groups in Canada. Done properly, the right deal with First Nations will put the final nail in the contraband tobacco crime spree that has been going on for years. No less important is the fact that a new deal with Aboriginals has the potential to help correct a national embarrassment. Many consider it a blight on our national identity that while the large majority of Aboriginals live in abject poverty, a handful live in the midst of incredible wealth. As you drive through the 6 Nations Reserve in Ontario, the stark contrast of run down residences next to a sprawling estates with manicured lawns and evident opulence underlines the disparity between the ordinary Band member and the kingpins of the illicit tobacco trade.
The reconciliation with Aboriginal groups in Canada requires a multi-faceted approach but it can clearly begin with a move to eliminate the tobacco sourcing element that inspires criminal networks to seek Aboriginal collusion in tobacco diversion schemes.
The key to a workable solution is to empower First Nations communities to procure raw leaf tobacco legitimately through a licensed supply chain and then add a tax to the end product that can be used by the community to improve the lot of all Band members, not just the self-chosen few who cream the profits and leave the rest of the community to continue to live in squalor.
Canada needs to come up with a national policy, adopted in each of the provinces, that emulates to developments that have been achieved in New Brunswick in recent years. Seven years ago New Brunswick adopted legislation that included permitting the sale of tobacco on reserves to non-native as well as native shoppers, tax exemptions for native sellers and native management retention of the lion's share of all tobacco revenue.
The outcome of this policy move has had some very positive results including reducing the illicit manufacturing of cigarettes on reserve to meet authorized sales levels only with no capacity to supply the illegal market. Also, it has enabled compliance with the pending provisions of Bill C-10 relative to the transportation of tobacco products. Best of all, perhaps, is that the New Brunswick law provides a model for the other Canadian provinces and territories. Hopefully the results in New Brunswick, particularly in the public safety arena, will provide the impetus for the rest of the country.
Ontario may be the most difficult province to convince to adopt the New Brunswick model. Ontario has become addicted to the tax revenues derived from tobacco sales and have time and again failed to address the public safety threats associated with the illicit trade in tobacco. The result has been that the reserves have become conduits and wholesale locations for organized crime distribution into major population centers.
Should Ontario adopt a model such as that of New Brunswick, the results should be far reaching and meaningful for the cause of Canadian Aboriginal peace and prosperity. The benefits of a New Brunswick style arrangement with First Nations should result in reducing the involvement of Organized Crime, building transparency and accountability between the Province and the reserves, providing much needed money to support public health and well-being on the reserves, and, it is a sustainable model for future generations.
Edward R. Myers is a freelance writer and former Editor of FrontLine Security Magazine.
SOURCE FrontLine Security
For further information: Edward R. Myers, [email protected], 613-986-5756