Cigarettes and Tobacco News

Jan 12, 2007 -- Cigarette smuggling is growing at an alarming pace and the federal government must intervene to dismantle the black-market industry, which lures teens into smoking and costs millions every year in lost tax revenue, warns new research released Monday by a national health organization.

"Cheap cigarettes are bad for everyone," said Dr. Atul Kapur, president of Physicians for a Smoke-Free Canada.

Many Canadians have easy access to illegal cigarettes sold or smuggled from First Nations reserves and the government is losing control of the tobacco industry, according to the association.

It found a widening gap between the amount Canadians report they're smoking and the tobacco taxes collected by governments. Provincial governments each lose between $150 and $250 million in tobacco taxes every year, the group estimates.

Smugglers, the group said, are exploiting First Nations communities, flooding the market with cigarettes that don't meet regulatory or labelling requirements, sometimes have an unknown origin and are sold in plastic bags.

It's a serious problem because the prevalence of cheap black-market cigarettes makes it easier for teens and other young people to gain access to them, Kapur noted.

It also means adult smokers may be more likely to smoke more because they have to spend less on smuggled smokes.

The RCMP told CanWest News Service earlier this year there has been a massive increase in seizures of contraband cigarettes.

"Since 2002, our seizures have increased about tenfold," said RCMP superintendent Joe Oliver. "We're looking at potential losses, if you're looking at all taxes, in the hundreds of millions of dollars. It's not cheap."

Physicians for a Smoke-Free Canada used Health Canada smoking surveys, government reports on tax revenues, municipal garbage audits and tobacco industry surveys to assemble a report on the growing threat of tobacco smuggling.

"There's a lot of things that are threatened here, not just in aboriginal communities, but in all communities," said Neil Collishaw, the association's research director. "Health is under threat, but the very rule of law is under threat too."

Part of the smuggling problem lies in the fact cigarettes sold on native reserves are exempt from provincial and federal sales tax.

Although the cigarettes are only supposed to be sold to people with tax-exempt status, it seems a much larger portion of the population is taking advantage of buying cheap cigarettes on reserves.

For instance, close to one in five Canadians, or about 17 per cent, said they purchased cigarettes on reserves in the last six months, according to a Health Canada survey.

An audit of Toronto's garbage supply showed that nearly one in 10 cigarette packages left on the street were illegal brands.

Collishaw said it's unclear whether most of the smuggling problems originate within First Nations communities, but that there's several steps the government and reserves can take to curb the prevalence of the industry.

The government should impose conditions on tobacco manufacturers to make sure they properly collect taxes and revoke the licences of those in breach, said Kapur.

It should also improve tax marking on cigarettes and create an improved tracing system for tobacco products in order to address the problem of smuggling.

Another major step would be to help First Nations governments with meeting treaty standards for tobacco control.

The group also wants the government to restrict supply of raw materials, such as tobacco, specialized filters and machinery to manufacturers that operate legally.