For Immediate Release
September 24, 2009

Debate on cheap smokes heats up the House
Barrett debates his Tobacco Tax Reduction Act

Queen’s Park – The McGuinty government is not set to slash taxes on legal tobacco to dismantle the illegal/contraband market.

Today, Haldimand-Norfolk MPP Toby Barrett debated his bill -- Bill 199,The Tobacco Tax Reduction Act, that called for a one-third reduction in Ontario tobacco taxes in order to shut down the illegal market – on the understanding Ottawa would follow suit.

“Today, Ontario’s world-recognized tobacco control policies are no longer working,” Barrett told members of the Ontario Legislature. “Essentially, this province has gone from first to worst.”

Barrett went on to say that losing control of the tobacco trade has had devastating effects not only on health but also economically and socially. Government inaction justifies participation in the illegal trade and it does suggest to some that tax evasion is tolerated and one need go no further than Caledonia to realize the proliferation of contraband tobacco which feeds that cynicism some feel with respect to politicians and the effectiveness of government.

“Now, when it comes to tax policy, tax hikes are no longer forcing people to quit smoking,” Barrett said this afternoon. “It forces them to find a cheaper alternative, whether it’s from the trunk of a car or at a smoke shack at Six Nations, at Caledonia or elsewhere across the province. The law of diminishing returns was reached a long time ago. In my view, tax cuts, coupled with enforcement, coupled with border control and coupled with education, are ways that this government—any government will win this war on organized crime.”

Tobacco tax cuts are not new.  In 1994, Prime Minister Jean Chrétien, Premier Bob Rae and four other provinces realized illegal tobacco was out of control. They dropped taxes and shut down literally hundreds of illegal smoke shacks overnight. During the 1980s and 1990s, high tobacco taxes and high retail prices fostered smuggling. By 1991, it was believed that one in every nine cigarettes in Canada was contraband, yielding $709 million to smugglers. In 1994, only 11% of tobacco was illegal, considerably less than today’s 50 per cent.

“Why was 11 per cent at that time considered out of control but 50 per cent in 2009 is not? Barrett asked. “My question is, is this government condoning illegal tobacco consumption? Has there been a change in values in our Ontario government with respect to illegal activity? I wonder, does someone have their hand open behind their pocket? Where is the motive for the acceptance of this kind of illegal trade? Is illegal tobacco—it has been suggested by some—this government’s way of helping reserves out of poverty? If so, this is backwards thinking. This is criminal thinking, in my view.”

Although Barrett’s bill did not pass second reading today, he feels that this is just the beginning.

“I was successful in opening debate on this issue in the Ontario Legislature for the first time in five years,” Barrett said. “There are many who feel the way I do and it reinforces the need for the McGuinty government to take action. Now, I look forward to this government to introduce his own ideas and legislation on illegal tobacco.”

Gary Grant, spokesman for the National Coalition Against Contraband Tobacco agreed: “All three parties at Queen's Park need to get serious about contraband and it's our hope that this debate today will be the springboard to action that will make a difference.”

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For more information please contact
MPP Toby Barrett at 1-800-903-8629