Canada: Canadians Concerned About Link Between Increased Taxes and Contraband

Source from:  Canadian Convenience Stores Association,January 22, 2014 01/30/2014

In the lead up to the 2014 Federal Budget, the Canadian Convenience Stores Association (CCSA) has conducted a national public opinion survey on contraband (illegal) tobacco.

The survey, conducted by Abacus Data Inc. in November of 2013, shows that Canadians are increasingly concerned about illegal tobacco:

Nationally, nearly half (47%) of all Canadians consider contraband tobacco a problem;
A strong majority also recognize the negative impact the sale of contraband has on convenience store retailers;
Over 78% of Canadians recognize that increased tobacco taxes can result in an increased use of contraband tobacco;
83% of Canadians agree that the incentive to smuggle illegal tobacco increase as tobacco taxes increase.
"As retailers, these numbers are not surprising to us," says Alex Scholten, President of the CCSA. "We have experienced firsthand the effects of contraband tobacco, particularly as tobacco taxes have increased at the provincial level," adds Scholten. "People are concerned about how contraband tobacco activity will impact their communities and rightfully so."

The CCSA has been engaging the Harper Government to ensure action is taken to fight illegal tobacco. Specifically, the Association has asked for increased enforcement measures to fight illegal tobacco smuggling and the criminal organizations that conduct such activity, but they have also requested that the federal government keep tobacco taxes at their current level to avoid a surge in the illegal market.

"What was particularly interesting within the survey is that Canadians see the connection between tobacco tax increases and a rise in illegal smuggling," says Scholten. "The federal government should take this into consideration in the lead up to tabling the budget as a tax increase will undoubtedly hurt independent retailers and small businesses as well."

A Canadian Taxpayers Federation and Reason Foundation study tabled in January estimated $1.1 billion was lost in annual tax revenue as a result of contraband tobacco. In addition to lost revenue, the presence of illegal tobacco also increases the potential for youth consumption of cigarettes, as the criminal organizations who traffic this illegal product do not check for I.D. when they sell tobacco to youth.

"Our Association believes that no minor should ever have access to tobacco," stated Scholten. "In light of National Non-Smoking Week, we hope that the Federal government would consider the impact increasing taxes may have on consumption of illegal tobacco products by youth, via the black market."

About the CCSA

The Canadian Convenience Stores Association (CCSA) is a national not-for-profit trade association that represents the interests of over 23,000 convenience store retailers operating in Canada. Our mission is to foster the success of the convenience store industry in Canada by representing the best interests of our members, and the communities they serve. We accomplish our mission through government relations and advocacy, promoting the professionalization of the industry and creating industry recognition and awareness.