Here’s some government promises on illegal smokes
 
By MPP Toby Barrett
Last week I wrote of the illegal tobacco trade that continues to spiral out of control each and every day.
 
Losing control of the tobacco trade is devastating – economically and socially. Government inaction justifies participation in the illegal trade and suggests to some that tax evasion is tolerated. One needs to go no further than Caledonia to realize the proliferation of contraband tobacco feeds the cynicism some feel about politicians and the effectiveness of government.
 
And it’s not just pick up trucks or trunks loaded with smokes, but just about everything, from tractor trailers to motor homes, full of contraband trafficked by sophisticated criminal networks.
 

This June, the Ontario Legislature passed into law amendments to the Tobacco Tax Act. These amendments include:

  1. enforcement provisions aimed at individuals, where there are reasonable and probable grounds to believe that the individuals have contravened the act;
  2. the authority for the court to suspend the driver’s licenses of persons convicted of offences under the act involving the use of motor vehicles;
  3. provisions that prohibit the possession of any quantity of unmarked cigarettes;
  4. the authority for the Minister to apply for a court order to permit the retention of things that are seized that may afford evidence of contravention of the act.

And in May 2008, the federal government rolled out a Contraband Tobacco Enforcement Strategy that promised to:

  1. dismantle the illegal manufacturing facilities in order to cut off the supply lines, and to confiscate illegal products and arrest those involved
  2. hire more RCMP officers
  3. work with U.S. officials

The effectiveness of this promised action by both levels of government is yet to be seen, certainly locally.

We have been through tobacco lawlessness before. From 1991 to 1993, the illegal tobacco market had grown from 8.22 per cent to 27.43 per cent. As a result, in 1994 the federal and provincial governments in Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island, reduced taxes by between $14 and $21 per carton – local smoke shacks disappeared overnight.

Basic economics indicates criminal activity will not exist if the economic incentive to participate has been eliminated. Crime rarely occurs without motive. My long standing suggestion to eradicate the illegal tobacco market is to crash taxes, as was done in 1994, thus eliminating the discrepancy between the legal and illegal price.

Consumers can purchase baggies of contraband smokes for as little as $6.00 to $8.00 for 200 – this is less than the price smokers pay legally in the corner store for only 20 cigarettes.

The Canadian Convenience Stores Association recently released a status report on contraband tobacco in which noted the following: “The RCMP has clearly shown that the most recent rise in contraband tobacco coincided with a substantial tax increase on tobacco products beginning in 2001. Over this time span, both levels of government more than doubled taxes on tobacco. This has created a significant price differential between legal and illegal tobacco products. This differential provides the “room” for significant criminal margins to exist, while maintaining an attractive (albeit illicit), consumer price point.”

We have government for a reason. We have provincial and national police for a reason. And we now have a number of new federal and provincial policies and laws to deal with contraband.

Promises have been made.