"Non-taxed" cigarette consumption exploding

ps - no one can afford the regular smokes here anymore. everyone is also buying cheaper beer too. in fact, one discount beer company had scored such a big profit share from one of the Big Two beer companies (we grew up buying 90% of beer from one of molson or labatt - so every beer was also the same price) immediately bought out the discount brewer. people would prefer to keep their regular smokes and regular beer (i've recently switched both after 25 years) but plain economics is forcing their hand. the fact that people are also changing beers too shows the switch in smokes is MOSTLY of economic necessity. when are you gonna fix the rotten state of the economy for the blue collar guys and gals, mr gov accountants and lawyers?

37% of smokers buying illegal cigarettes: Study
Email story
Print
Choose text size
Report typo or correction Digg this story
Add to Facebook
Tag on Delicious
Availability of contraband smokes negates intended health benefits of tobacco taxation, report says

Nov 05, 2007 05:53 PM
THE CANADIAN PRESS
A new study that found one-quarter of Ontario smokers bought contraband cigarettes from aboriginal reserves, costing the province at least $72 million in lost tax revenue, should be a wake-up call to the governing Liberals to crack down on illegal tobacco sales, critics said today.
The study, conducted between January 2005 and June 2006 for the Ontario Tobacco Research Unit, found 37 per cent of Ontario smokers avoided paying hefty tobacco taxes by purchasing their smokes from Indian reserves, while 26 per cent said they had done so in the last six months.

The practice was more widespread in northern Ontario, with 54 per cent of smokers saying they bought cigarettes on reserves. The practice cost the province $72.3 million and Ottawa nearly $50 million in foregone taxes over the 18-month period, said the study, which was released today.

“Taxation of tobacco is an effective policy for preventing and reducing cigarette consumption,” the study’s authors wrote.

“However, the widespread availability of contraband cigarettes can undermine the effectiveness of this policy, negate the intended health benefits of tobacco taxation and reduce taxation revenues.”

Much of Canada’s illegal tobacco comes from the United States and is smuggled onto Indian reserves, the study said. Other illegal cigarettes are manufactured in Canada or are tax-exempt cigarettes intended for Indian reserves.

Such cigarettes are sold for about one-third the price of taxable smokes and sometimes sold even more cheaply on reserves, the study said.

The province should crack down on those selling and manufacturing illegal cigarettes, better enforce tobacco quotas for reserves and encourage Indian reserves to collect their own tobacco taxes, the report suggested.

Michael Perley, with the Ontario Campaign for Action on Tobacco, said the governing Liberals can’t afford to keep ignoring the problem.

“The contraband problem has the potential to undermine the effectiveness of the entire provincial tobacco strategy if it is not brought under control,” said Perley.

Smuggling hotspots and the locations of cut-rate “smoke shacks” are also well known, he added.

“The premier needs to say something about this and make it clear that it is a serious problem.”

The province needs to cut off raw materials to illegal manufacturers and do a better job of tracking the tax-exempt tobacco that is sent to reserves under the current quota system, he said.

The issue needs a co-ordinated approach throughout all provincial ministries and people have to realize that they are breaking the law when they buy cheap cigarettes, Perley added. “None of these are magic bullets in and of themselves, but together, collectively, they are the remedy.”

While some critics are calling for a tough crackdown, Ontario Regional Chief Angus Toulouse said the province has to be careful it doesn’t run roughshod over the rights of Indian communities. Such communities are responsible for policing and are dealing with the issue of contraband cigarettes in their own way, he said.

“They have the jurisdiction,” Toulouse said. “What they require is the time to work with their community members to develop the regulations that make sense at the community level . . . Each one may approach it a little bit differently.”

A poorly thought-out crackdown is destined to “fail at the end of the day” because it wouldn’t have the backing of the community, he added.

Julie Rosenberg, spokeswoman for the Ministry of Health Promotion, said the government is committed to reducing the number of smokers in Ontario by helping them quit and enforcing the province’s anti-smoking laws.

“The sale of contraband tobacco is a complex issue,” she said, noting it is also a federal responsibility. “The government . . . will continue to work with various government agencies at all levels to stop the sale of contraband.”

But Conservative Lisa MacLeod said the Liberals have known about this problem for a while and have done nothing.

“One rule for all is something that needs to prevail,” MacLeod said. “They don’t want to enforce the law but they have to enforce the law and they need to start dealing with it directly . . . There obviously needs to be a crackdown immediately.”