Canadian Provinces Fan Illicit-Trade Flames

Source from:  Tobacco Reporter 04/20/2009

Imperial Tobacco Canada seems to be becoming increasingly frustrated as some provinces fan the flames of the country's illicit trade inferno. The sale of illicit tobacco is said by Imperial to have reached crisis levels in Canada. One in three cigarettes purchased in the country is illicit; as are 48 per cent of those bought in Ontario and 40 per cent of those bought in Quebec. On Wednesday, Imperial issued a press note saying it was shocked by the latest in a series of counterproductive provincial and territorial indirect and direct tax increases on tobacco from the governments of Alberta, Ontario, Manitoba, British Columbia, the Northwest Territories and Quebec. The increases made these provinces even more attractive for Canada's flourishing illegal tobacco industry. "In times of economic crisis, increasing tobacco taxes may seem to be an easy way to mitigate planned government deficits," said chief financial officer, Richard Hodgson. "But, for the majority of the provinces, it serves only to fuel the growth of illegal tobacco sales. The reality, in the long-term, is likely to be larger deficits for some provinces due to higher levels of uncollected and delinquent tobacco tax." 'Many of these tax increases will not have the desired effect and will undermine efforts to stop the growth of illegal tobacco sales,' Imperial said in a press note posted on its website (www.imperialtobaccocanada.com). "For example, in Ontario the excessive tax increases from 2002 to 2006 have led to an explosion of illegal tobacco sales (48 per cent of tobacco purchased in Ontario is illegal), an increase in the number of smokers (according to Health Canada's Canadian Tobacco Use Monitoring Survey), and a three year track record of ever declining government tobacco tax revenues." Enditem