by Christine McHale
Haldimand-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.
Second, the criminal element that flourishes around the contraband cigarette trade needs and wants money desperately to fuel other criminal activities. They will still trade in illegal tobacco plus turn to other contraband to make money. They aren’t going away.
Third, governments actually did have a good reason to raise cigarette taxes. Yes we all know the obvious reason, collect more money, but they wanted to deter smoking, especially in young people. The argument was to price cigarettes out of reach of as many people as possible. This worked, for a while, until of course the illegal cigarettes made their presence known. Does Mr. Barrett want to encourage more people to take up smoking because now cigarettes would be affordable? Physicians for a Smoke-Free Canada warns against lowering cigarette taxes for obvious health reasons. Does Mr. Barrett believe he has the better interests of people in mind over doctors?
The health costs due to smoking related illnesses are very high and another reason why governments raised cigarette taxes. If they were to lower taxes government would still have to contend with the high health costs of smoking related illness so taxes would be raised elsewhere. According to the web site for Physicians for a Smoke-Free Canada, the national health costs associated with smoking (hospitalization, physician fees and drugs) for the year 2006 was over 4.4 billion dollars. Again, that’s for 2006. Health costs have gone up, no doubt, so cutting cigarette taxes… you do the math.
How about just doing what needs to be done in the first place. Ontario Ministry of Revenue should start to raid smoke shacks along Highway 6 and with the aid of the OPP shut them down. After all, they didn’t have a problem raiding an Arabic social club in Hamilton, with no police in tow even, at least until they found a gun, nor do they have a problem going after those who buy illegal cigarettes. Three guesses as to why they won’t go after the sellers and the first two guesses don’t count! Besides, who knows what else will surface in those smoke shacks.