August 2, 2007
Government inaction on contraband cigarettes a threat to health and security
(Ottawa) Responding to tobacco industry research showing that 16% of Canadian smokers are buying their cigarettes on the black market, Physicians for a Smoke-Free Canada today renewed its call for government action against the growing problem of contraband tobacco sales.
"When health charities, retailers, and big tobacco are agreed that more effective measures on the manufacture and sale of illegal cigarettes are required, you might expect some action from the provincial and federal governments to put these measures in place," said Neil Collishaw, research director for Physicians for a Smoke-Free Canada. "Sadly, too little is being done. As a result, more people are smoking, more government revenue is being lost and more Canadians are engaging in criminal acts."
PSC is particularly concerned that the government of Ontario is doing little to change its tax collection methods in ways that will reduce illegal cigarette sales. "Ontario is the province where the problem is largest," explained Collishaw. "Over half of the illegal cigarettes are sold in Ontario."
Even though most of the illegal cigarettes are sold from first nations territories, provinces which have higher first nations populations have lower rates of illegal cigarette use. According to the Imperial Tobacco study, Manitoba, Saskatchewan, British Columbia and Alberta have substantially lower rates of illegal tobacco use.
"The situation is better in the western provinces in part because those provinces have put in better tax collection methods," explained Collishaw.
In Ontario retailers on first nations territories can purchase cigarettes tax-free from wholesalers. In theory, they can only then be resold to status Indians in retail locations on reserves. In practice, the widespread availability of tax-free cigarettes, combined with the lack of enforcement of existing rules, provides a convenient cover for the widespread distribution of contraband cigarettes.
By contrast, in Alberta, on-reserve retailers must pay provincial taxes on cigarettes purchased from wholesalers, and then seek reimbursement from the provincial government on the presentation of satisfactory evidence that they were sold at retail tax-free to qualified status Indian purchasers. The result is a much more workable and enforceable system and much tighter control over tax-free cigarettes.
"This is one of many measures that, taken together, can bring the problem of contraband tobacco to a solution that is good for first nations communities, good for public health, good for legitimate retailers and good for government," said Collishaw.
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