Tobacco tax hike leaves the door open to smuggling increase

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Cornwall police chief Dan Parkinson.

CORNWALL, Ontario – Fears are emerging that the tobacco smuggling trade in and around Cornwall will be bolstered by news that cigarette taxes are going up.

In a surprise move Tuesday the federal government announced a significant increase in the amount smokers north of the border will pay to light up - even so-called “duty free” tobacco won’t be spared from the tax hike.

Cornwall Community Police Service Chief Dan Parkinson told Seaway News while the government has thrown more than $91 million at augmenting the RCMP’s ability to combat contraband tobacco it’s not difficult to think smugglers will look to capitalize on a changing market.

“ I would assume that the potential to increase ill-gotten gains would emerge as a significant motivator for organized crime to continue or grow,” he said. “No matter how many police resources you throw at this type of problem, there will be no successful outcome without very tight coordination and sharing of information and new technology.”

The government expects to rake in $3.3 billion in additional revenue from the tobacco tax hikes over the next five years.

The increased revenue will come via increases of about $4 per carton of 200 cigarettes, to $21.03 from the current $17. The government says the federal duty on cigarettes has effectively not increased since 2002 and that the hike accounts for inflation.

A corresponding tax hike will also be applied to cigarettes, with the duty increasing to $21.03 per 200 tobacco sticks from the current $17.

The federal excise duty on manufactured tobacco (such as chewing tobacco or fine-cut tobacco for roll-your-own cigarettes) will increase to $26.29 per 200 grams from the current $21.25. Also, the excise duty on cigars will increase to $22.89 per1,000 cigars, from the current $18.50, and the additional cigar duty will also increase.

The increases which began Wednesday will widen the price differential between legal and illegal tobacco. Contraband can cost about $70 less than legal product, depending on the market.

Parkinson said the Cornwall service used to contribute to a Regional Tobacco Task Force, but funding for the program ran out some 18 months ago and the officers have since been returned to duty with the municipal department.

“While we continue to work very closely with the RCMP and other law enforcement agencies to disrupt, deter and dismantle organized crime, we do not specifically have any personnel assigned to fighting tobacco smuggling issues,” said Parkinson, who suggested technology could soon play a role in the battle against contraband. “I understand that there may be the potential to invest in drones as part of our interdiction efforts.

“Licensing the production and distribution of what is presently deemed to be illegal tobacco products may also be worth a second look. I don’t believe we can arrest our way out of this type of criminal activity. There is too much money to be gained by enterprise oriented criminals.”

Representatives from convenience store associations, representing both Ontario and Canada, have spoken out against the contraband tobacco problem. Neither have been reached yet for comment.

Geographic location: Canada, Ontario, U.S.

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  • Isabelle Groves
    February 14, 2014 - 10:52

    This tax increase, let's face it, is just for the government to make more money not the excuses they make. Funny they don't tax liquor. So you can drink and go out and kill someone. Really!!