Canada: Western Convenience Stores Concerned About Increase in Contraband Tobacco Following Manitoba Budget

Source from:  Marketwire 04/18/2013

The Western Convenience Stores Association (WCSA) raised concerns today following the Manitoba budget, which saw an increase in the provincial sales tax alongside a tax increase on legal tobacco products.

"The increase in the PST to 8% will ultimately hurt sales and drive business to neighbouring jurisdictions," said Andrew Klukas, President of the WCSA. "Coupled with an increase in tobacco taxes, Manitoba retailers are quite concerned about the impact these increases will have on their business."

Cigarettes in Manitoba are now the most expensive in Canada, which the WCSA believes will result in a spike of activity in the contraband tobacco market.

While contraband tobacco is traditionally associated with Ontario and Quebec, there has been notable illicit activity in Manitoba in recent years. Contraband tobacco is sold without provincial or federal taxes, providing a cheap alternative to the legal product. The RCMP estimates over 70 organized crime groups are involved with the contraband tobacco trade, often selling drugs and guns alongside illegal tobacco. Contraband tobacco is also more accessible to youth, as it is sold without age-verification checks and at half the cost of legal tobacco. This poses a significant threat to the safety of our young people and Manitoba communities.

The increase comes as a surprise to the WCSA, given the strong action the Government of Manitoba has shown in fighting contraband tobacco in recent months. In the last provincial budget, changes came forward that allowed law enforcement officials to move more quickly in shutting down smoke shacks. In addition, the Government of Manitoba has consistently shut down the Dakota Chundee smoke shack, which serves as a key contraband outlet for the West.

"Unfortunately, it appears the provincial government has taken one step forward and two steps back with this tax increase," said Klukas. "The tax increase on tobacco will provide more opportunity for contraband traffickers, ultimately hurting our small businesses and threatening the safety of communities in Manitoba."

With increased taxation in Saskatchewan, and now Manitoba, the West is a viable prospect for the illegal market. "Certainly with this increase, traffickers will now be looking westward as a possible market for their illegal product. It is extremely difficult for our law-abiding retailers to compete amidst the thriving illegal industry," said Klukas.

"We are hopeful that this increase in taxes will be accompanied by legislation to fight contraband tobacco, be it through increased penalties or enforcement for those convicted of contraband offences," said Klukas. "We do not want to see this illegal market move westward or gain any further ground, as it has in other provinces."

About the WCSA

The WCSA represents over 6,000 family-owned and corporate-owned convenience stores that employ over 30,000 people in communities across Western Canada. The WCSA offers free age verification training to retailers. Enditem