Some ideas to curb the illegal tobacco trade

Illegal tobacco continues to permeate discussion across the riding – whether it be at the recent annual meeting of the tobacco board, or on blogs given the accelerated construction of smoke shacks along provincial highway 6.

Because of high taxes on tobacco and virtually no enforcement, as much as 40 per cent of the tobacco now smoked in Ontario is illicit. Cigarettes are being sold for pocket money out of the trunks of cars, and at smoke shacks - even on provincially-owned land in Caledonia. Why would a smoker pay $50 to $70 for a legal carton of cigarettes when they can easily purchase the same number of smokes for between $6 and $20.

Ironic isn’t it, that government’s own high-tax public health policies have spawned the illegal trade.

A 2006 study commissioned by the industry, shows an average annual decline in tobacco of about two per cent. And while the McGuinty government may tout their tobacco policies as curbing smoking habits, surveys show 75 per cent of this decline is simply a transfer to the illegal trade.

The illegal trade has disastrous social and economic consequences. It not only brings to communities cheap smokes but also drugs, firearms, alcohol and a growing disrespect for the law.

Many view the illegal trade as inconsequential - an activity that only hurts ‘Big Tobacco’ and ‘Big Government’. While it is true that legal manufacturers and retailers are losing big money, Canadian taxpayers are also being defrauded to the tune of billions each year. Locally, the illegal trade has aided in the current crisis that we see with our tobacco growers, and with communities in Haldimand and Brant.

Federally we have seen the announcement of a multi-department task force to combat illegal tobacco across the country. Caledonians, tobacco growers and the rest of the industry are waiting to see how these measures will work on the street.

There is no easy solution to this problem; however, in the 1990’s cutting tobacco taxes shut down hundreds of illegal smoke operations overnight.

This May, Benjamin Kemball, of the Canadian Tobacco Manufacturers’ Council, testified before the Federal Government’s Standing Committee on Public Safety. Mr. Kemball presented very reasonable measures that could help prevent the illegal industry from spiralling.

Aside from enforcement, Mr. Kemball suggested that the supply of specific machinery and materials associated with the manufacturing of tobacco products be closely monitored and controlled. He said that the federal government has allegedly issued more than 20 tobacco manufacturing licences - but do not follow up with routine inspections.

Tobacco companies, he said, can also play a pivotal role by working with suppliers to the industry to ensure policies like “know your customer” apply.

Mr. Kemball’s last recommendation was one he felt was of utmost importance - that was to introduce a First Nations Tobacco Tax which would be comparable to the provincial tobacco tax. Proceeds could fund programs on Reserves. Apparently some First Nations leaders are worried the illegal trade is affecting their communities as well and feel a tax may play an important role in helping to resolve the problem.

There are many people who are willing to step up to the plate to provide suggestions to the issue – let’s hope that government will pull all these folks together to develop a much-needed solution.