More Taxes, More Police but Still More Contraband

   The contraband cigarette circus continues with governments unwilling to try new ways to stop it despite so much evidence that increased taxes and enforcement have not been especially effective.

   The federal government recently increased its tobacco taxes $4 a carton and has given the RCMP another $91 million for high-tech electronic surveillance along the Ontario-Quebec-U.S. borders. A carton of 200 taxed cigarettes now ranges from roughly $80 to $112  depending on local taxes. 'Baggies' of 200 untaxed cigarettes can be purchased for under $10. People who smoke like the idea of buying their cigarettes for a fraction of the retail store cost, even if they are illegal.

   The federal government admits that the contraband problem is not improving. It says that 30 to 50 per cent of tobacco purchased in Canada is bought illegally. Contraband tobacco has been spreading steadily outward from Ontario-Quebec into the Atlantic and western provinces. 

   Governments won’t try different strategies against contraband tobacco for two reasons: They are addicted to tobacco tax revenue ($7.5 billion in 2011), and they fear backlash from powerful anti-smoking lobbyists such as the Canadian Cancer Society. I have nothing against the anti-smoking lobby. They are sincere and dedicated in their commitment to help people stop smoking. However, they are totally grounded to the argument that higher taxes are the best way to reduce smoking.

   There is evidence that slashing tobacco taxes dramatically reduces contraband tobacco and does not significantly increase the number of people who smoke. Most governments and anti-smoking organizations around the world refuse to consider that argument. 

   The contraband tobacco issue is extremely complicated and needs fresh thinking. And, as noted in Smoke Signals: The Native Takeback of North America’s Tobacco Industry it cannot be fully resolved until Canadian governments get serious about resolving Native sovereignty issues.