February 19, 2009 - Billions of dollars in unpaid tobacco taxes are lost every year from the sale of illegal cigarettes. And it is only getting worse. In 2008, the federal and provincial governments together lost approximately $2.4 billion in taxes and that number is growing as the sale of illegal cigarettes grows. The federal government's share was $1.1 billion.
In December, the Ontario Auditor General reported that the estimated tax loss for Ontario in 2006-2007 was $500 million; and we believe it could be much more than that. We estimate that the Government of Quebec lost approximately $380 million in 2008.
The numbers are alarming: 13 billion illegal cigarettes sold in Canada in 2008; Nearly 50 percent of all cigarettes purchased in Ontario are illegal; 40 percent of cigarettes purchased in Quebec are illegal and Hundreds of millions of dollars in profits for organized crime. It is clear that teenagers are getting hold of these cheap cigarettes. A teenager can buy 200 illegal cigarettes for as low as $6, compared to approximately $60 for the same number of legal cigarettes.
Garfield Mahood, the executive director of the Non-Smokers' Rights Association stated, "In this time of economic recession, a time when governments are desperate for revenue, it is critical that the government recover over a billion dollars in unpaid tobacco taxes."
As President Obama arrives on Parliament Hill today (2/19/2009), he will be greeted by a giant, 21-meter long banner stating "Please STOP cigarette smuggling from the U.S to Canada". The Canadian Council for Tobacco Control (CCTC) is calling for effective action to end the massive volume of smuggled cigarettes originating in the U.S. and entering Canada. The Royal Canadian Mounting Police (RCMP) reports that cigarette smuggling from about 10 illegal, unlicensed factories located on the U.S. side of the Akwesasne reserve near Cornwall represents as much as 90% of cigarette contraband in Canada. This contraband is having a very serious adverse impact on Canadian public health, public revenue and public security.
References: Illegal tobacco costs billions in lost taxes, Benjamin Kemball (president and chief executive officer of Imperial Tobacco Canada), GuelphMercury.com, 2/19/2009; Parliament Hill urges President Obama to stop cigarette smuggling from the U.S. to Canada, CNW Group, 2/19/2009.
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