Archive for September 8, 2009

by Christine McHale

rollies_worse_for_health_study_1477525218Haldimand-Norfolk MPP Toby Barrett is calling on both the provincial and federal governments to reduce taxes on legal cigarettes in order to tackle the ever present problem of contraband cigarettes being sold out of makeshift shacks. According to Mr. Barrett, the main reason why the contraband cigarette trade exists is the high taxes on legal cigarettes. Cut taxes and you dry up the contraband trade. Sounds good? Not really.

First, governments would never be able to sufficiently lower cigarette taxes to make legal cigarettes competitive. I have spoken with RCMP officials in Cornwall, an area that makes the contraband cigarette trade in Caledonia look miniscule, and they say lowering taxes would have little effect. There’s a difference of about $50 to $60 per carton, at least, and no government will give up that much money. Ontario alone took in just over 1.2 billion dollars in revenue from cigarette taxes in fiscal 2007-2008, Canada took in over 2.6 billion for the same period and all provinces and federal revenue for 2007-2008 was just under 7 billion dollars. Taxes would be raised somewhere else to make up for any shortfall, especially in the tough economic times of today when governments are scrambling for money anyways. Lower tax here only mean we would all end up paying higher taxes somewhere else. Just what we need in tough economic times.

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