Canada’s National Coalition Against Contraband Tobacco (NCACT) has expressed disappointment that the 2014 federal budget “increased the lucrative nature of contraband tobacco while also failing to provide meaningful measures to stop it,” according to a Canada Newswire story.
“By increasing the difference in price between the legal and illegal market, the government is effectively putting money in the pockets of gangs,” said Gary Grant, a spokesman for the NCACT and a 39-year veteran of the Toronto Police Service.
“The RCMP estimates that there are about 175 criminal gangs that are involved in the contraband trade, using it as a cash cow to finance their other illegal activities, including guns, drugs and human smuggling.
“In fact, just yesterday [Feb. 11], 12,000 illegal cigarettes, along with drugs and cash, were seized by the Gatineau police a short distance from parliament.”
Contraband tobacco is said to be a prime source for youth smoking.
“Illegal cigarettes are cheap, easily accessible, and the criminals who sell them don’t check for ID,” said Grant.
“Unfortunately, this year’s budget will do little to stop this. If anything, it creates conditions under which contraband tobacco can flourish. $4.03, the size of the tax increase, is actually the cost of the cheapest baggies in some smoke shacks.”
The budget does allocate nearly $92 million over five years to enhance contraband tobacco enforcement, mostly focused on high tech equipment to monitor the porous border between Quebec, Ontario and the U.S.
However, the budget contained no new funds to deal with the thriving domestic smuggling trades.
Meanwhile, Canada Newswire reported in a separate story that the Frontier Duty Free Association (FDFA), which represents Canada’s land border duty-free shops, had expressed concern that the “huge excise tax increase on tobacco products” would work counter to government revenue goals, health strategies and Canada’s economic interests.
“We understand and support the government’s need and desire for a balanced budget and the goals of Canada’s tobacco health strategy, but a tax shock of this magnitude, which was brought in without any prior consultation or warning, is a major blow to our stores,” said Abe Taqtaq, FDFA president.
The 2014 budget increased the federal excise tax on duty-free cigarettes from $15 per carton to $21.03 per carton, a 40 percent increase that was applied overnight.
“Our members are troubled about the unintended consequences of this tax increase since it threatens to divert sales away from our members’ stores to the illicit market, which in turn jeopardizes both the government’s revenue and public health goals,” said Taqtaq.