September 5, 2008 - The Canadian federal government on Thursday, 9/4/2008 unveiled a new prototype of an excise duty stamp designed to help authorities spot contraband tobacco products. The stamp, which was designed and produced by the Canadian Bank Note Co. and SICPA Product Security SA, contains overt and covert security features much like the identifiers stamped on money. Illegal possession of tobacco products without this stamp will be a criminal offense punishable by law. The Canada Revenue Agency will meet with industry and government stakeholders before rolling out the stamp in early 2010.
Trafficking in illegal tobacco provides cheap cigarettes, which encourages smoking, discourage quitting, increase average daily consumption, prompts relapse, and encourage youth initiation. Tobacco smuggling undermines the potential effectiveness of higher tobacco taxes reducing government revenues and encouraging adults to continue smoke and children to start smoking cigarettes. The availability of low-cost illegal cigarettes has particular implications for vulnerable populations such as young people and the economically disadvantaged. The Royal Canadian Mounted Police in April, 2008 said the underground cigarette industry costs the federal government as much as $2 billion in lost tax revenue per year.
A recent report, Contraband Cigarettes in Ontario by the Ontario Tobacco Research Unit finds that almost one-third of cigarettes currently purchased in Ontario are illegal. The Physicians for a Smoke-free Canada has shown that the contraband cigarette problem is most extensive in Ontario and Quebec. A private study by Imperial Tobacco has estimated that these two provinces account for 96.5% of all contraband purchases in Canada. Income from contraband tobacco can be reinvested to support other crime activities, to finance drug trafficking in Canada and to purchase illegal weapons.
A previous legislative response to the proliferation of contraband tobacco in Canada was to reduce taxes on legal tobacco in order to lower the price of cigarettes and thus discourage contraband production and distribution. - A Very Strange Move..
References: Revenue agency introduces new tobacco stamp to combat contraband, The Canadian Press, 9/4/2008; New security stamp aims to extinguish contraband tobacco sales, CBC News, 9/4/2008; Letter to Prime Minister Harper on Contraband Tobacco, Canadian Center for Addiction and Mental Health, 1/24/2008 and Contraband tobacco in Canada, BizAims.com, 7/30/2008.
Related news brief:Canada tobacco firms admit aiding smuggling..