Illegal tobacco trade

Illegal tobacco sales continue to be a big problem in Canada.

Illegal tobacco is the unlawful production, distribution and sale of cigarettes.

According to the Royal Canadian Mounted Police (RCMP), there are over 50 illegal cigarette factories and over 300 smoke shacks in Ontario and Quebec. As well, there are more than 175 groups tied to organized crime that are profiting handsomely from illegal tobacco.

The problem is exacerbated by excessive levels of tobacco taxation. A legal, taxed carton of 200 cigarettes costs $70-110, compared to $10-20 for the same number of illegal cigarettes.

Canada has some of the highest tobacco taxes in the world. In some provinces, the tax on tobacco products represents 70% of the retail price.

Governments look to tobacco taxation to solve two problems: reduce the incidence of smoking and refill public coffers with a quick infusion of revenue. The truth is that high, unexpected increases to tobacco taxes do not achieve either public policy objective. High prices on the legal tobacco products only serve to push adult consumers to the illegal market, particularly in a market like Canada’s where illegal tobacco is available and easily accessible yet evades taxes.

Imperial Tobacco Canada does not object to tobacco taxation. However, we call on the federal and provincial governments to take a steady, measured approach to taxation and avoid the ‘shocks’ that drive consumers to the illegal market causing a them to miss out on a significant source of tax revenue.

Contraband tobacco hurts all of us and has broad social, public safety and economic implications. The illegal sale of tobacco deprives Canadian governments of significant revenues, it finances criminal gangs and fosters other criminal activities, and it provides youth with easy and affordable access of tobacco products.