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Canada Raises Tobacco Tax Source from: NACS Online 02/14/2014 Canada's federal tax on tobacco products increased nearly 24% yesterday, the Toronto Sun reports. All tobacco products are included in the tax increase, which raises the prices for a carton of cigarettes by roughly $4. The move is expected to generate $96 million in additional revenue for the federal government this year, and more than $600 million annually in subsequent years. Moving forward, the tax will be indexed to the Consumer Price Index and adjusted every five years. Large retailers and wholesalers with more than 30,000 cigarettes in inventory are being required to send the federal government two cents for every cigarette they have in stock to account for the higher duty rate. The tax increases are as follows: Cigarettes: Across Canada: from $17 to $21.03 per 200 cigarettes and tobacco sticks Chewing tobacco and loose tobacco: Across Canada: from $21.25 to $26.29 per 200 grams Cigars: Across Canada: from $18.50 to $22.89 per 1,000 cigars The Ontario Convenience Stores Association (OCSA) sharply opposes the tax increase on the grounds that it contributes to contraband tobacco. It is urging the Ontario government to maintain its current tobacco tax rates and not increase the provincial tax rate. "Increased taxes on tobacco products punishes law-abiding retailers, and do nothing to address the issue of contraband tobacco," said Dave Bryans, CEO of the Ontario Convenience Stores Association. "It is critical that Ontario does not add to the problem created by an excise tax hike by increasing their own tobacco taxes." OCSA is also asking the provincial government to follow through on its previous commitments to enhance enforcement to stop the illegal market from expanding and to consult with tobacco retailers to address the country's illegal tobacco problem. "We want to work with the government to address youth access to tobacco and the illegal tobacco market. Raising taxes is not the way to do this," Bryans said. "Tax increases may appear to be a short-term gain for governments, but the consequences faced by provincial law enforcement, communities and our small businesses that accompany these increases are felt for much longer." Enditem |