Illegal Cigarette Sales on Rise, Tobacco Firms Say

Source from:  William Marsden, Montreal Gazette; CanWest News Service Friday, August 03 08/06/2007

Government urged to cut taxes; anti-smoking group demands contraband crackdown Illegal cigarette sales that dodge federal and provincial taxes are rising at an alarming rate and the government should combat the trend by reducing tobacco taxes, according to a tobacco manufacturer's association study. The Canadian Tobacco Manufacturers' Council said Thursday their study shows that 22 per cent of of cigarettes smoked in Canada are contraband. That figure is 30.5 per cent in Quebec, the group says. The council says illegal tobacco sales are costing the Canadian and provincial governments $1.6 billion a year in lost taxes. Yves-Thomas Dorval, a spokesperson for Imperial Tobacco Canada, which dominates the Canadian cigarette market with at least 60 per cent of sales, blamed the illegal tobacco sales on natives and organized crime. "In some quarters people believe buying illegal cigarettes is acceptable," he said. "It's not acceptable. Everybody is affected." He said if law enforcement cannot solve the problem and government's only recourse is to reduce taxes "we will have to look at the fiscal issues." Louis Gauvin, spokesperson for the Quebec Coalition for Tobacco Controls, which includes the Canadian Cancer Society, said his organization "opposes any reduction in tobacco taxes. This is not a solution. Illegal tobacco sales are a sales problem and not a demand problem caused by high taxes." He noted that Quebec and Ontario, which have the largest illegal tobacco sales have the lowest taxes in Canada. "The problem is the lack of control over the source of illegal tobacco," he said. Dorval said 90 per cent of the illegal cigarettes are manufactured in plants over which the government has no control and imposes no restrictions. Many of these contraband brands are manufactured on native reserves in Ontario, Quebec and New York State. Enditem