Doctors Call For End to Government Tax Breaks for Tobacco Promotions

(Ottawa) - Physicians for a Smoke-Free Canada is calling on the Canadian government to end its practice of allowing tobacco companies to write-off the costs of advertising and promoting cigarettes against their corporate income taxes.

"The government gives over $100 million each year to Big Tobacco in the form of tax breaks for advertising expenses," explained PSC president, Dr. Atul Kapur.  "This tax write-off is almost double what the federal government spends on all programs to discourage smoking, or to help smokers quit."

The amount that tobacco companies spend on advertising and promotion was, until recently, a secret closely guarded by the companies.  As of early 200, tobacco companies have been required to report all promotional expenditures to Health Canada.  The amounts reported were not made public until earlier this month, when a Member of Parliament, Svend Robinson, was able to request the information as a reply to a parliamentary "question on the Order Paper."

"The amount spent by multinational tobacco companies to sell cigarettes in Canada is quite staggering," said Dr. Kapur.  "In 2002, they spent over $300 million, even though Parliament has twice passed laws which ban most forms of tobacco advertising."

"Canada's corporate income tax laws make no distinction between beneficial and harmful business expenses," said Dr. Kapur.  "That means that the tobacco companies were able to write off the entire $300 million against their considerable profits."  PSC estimates that the tax expenditure resulting from cigarette promotions cost the Canadian treasury $100 million (the companies report a annual tax rate varying from 30% to 40%).

"The amount Big Tobacco spends to encourage Canadians to smoke dwarfs the amount spent by Health Canada to discourage smoking by a factor of 12 to 1," Dr. Kapur calculated.  "The amount the government of Canada spends in tax subsidies for tobacco promotion is four times greater than the amount spent on anti-smoking campaigns."  In 2002, the Minister of Health authorized cuts of over $13 million to Health Canada's mass media budget to reduce smoking.

Dr. Kapur has written the Ministers of Finance and Health requesting revisions to the federal corporate income tax act to end tax deductions for the costs of promoting tobacco products.

- 30 -

For information:

Cynthia Callard
Executive Director
613 233 4878