Press Release

July 31, 2008

Tobacco smuggling agreement fails justice and fails health

Physicians plea for better approach
than corporate plea bargain

Today's announcement by the government of Canada that it had settled with two of the three multinational tobacco companies which supported and profited from the sale of untaxed cigarettes in the early 1990s is a disappointment, said Physicians for a Smoke-Free Canada.

"Neither public justice nor public health are served by this conclusion to this long outstanding crime," said Cynthia Callard, Executive Director. "Although the corporations entered a guilty plea, the individuals who oversaw the crime have been allowed to retire in peace. They have not been held to account for their role and will now never be held to account. Senior management - including many of the most prominent Canadian business figures - have been allowed to walk."

Although the government will receive over a billion dollars in this arrangement, it will receive nothing to compensate for the revenue lost as a result of its being strong-armed into reducing taxes in the 1990s. "Throughout the 1990s, total government tax revenues were about $2 billion less each year than before the tax-roll back. Only after 2001 did they return to the level of a decade below. "In essence, the government has settled for only pennies on the dollar."

PSC also raised concerns about the failure to include measures to address the victims of the crime for which the companies plead guilty, especially those children who started smoking in the 1990s because cigarettes were cheaper and who are now addicted adult smokers. In 1990, before the growth of the contraband market, only 21% of Canadians aged 15-19 were smokers. By the mid 1990s, the percentage had grown to over 25%. By 2006, after taxes were restored, the smoking rate for the age group had fallen to 16%. "The cohort of Canadians born in the 1980s continues to suffer from the wrongdoings and mismanagement of the smuggling crisis of the 1990s," said Ms. Callard. "Today's decision has nothing for them or their families."

She expressed particular concern at secrecy with which this agreement was negotiated. "It's more of a business deal than a sentence," she said, pointing out that government and tobacco industry officials assessed their circumstances situation and brokered a mutually agreeable conclusion in isolation. There was no public disclosure and there was no input from those affected other than government revenue departments. Nor are the conditions agreed to by the companies directly intended to reduce tobacco use. "Neither the health community nor, as far as we can tell, government health ministries were allowed input into this decision," said Callard. "If so, this is more than a lost opportunity, it is a failure for public health."

"Today's smuggling crisis is very different from the one on which the government is now closing the file," said Ms. Callard, noting that both stem from the ability of business greed to operate under the cover of unresolved border issues with the Mohawk Territories. "However, the end of one could lead to the end of the other if the government committed to use the resources from today's settlement to address the legal, political and economic problems that underlie today's contraband crisis."


  • Cynthia Callard (613) 233 4878