Anti-Contraband Coalition Welcomes Proposed Budget Actions Against Contraband Tobacco

Ontario must move quickly to introduce new measures that can hurt organized crime

TORONTO, April 23, 2015 /CNW/ - Today, the National Coalition Against Contraband Tobacco (NCACT) welcomed the Ontario government's budget commitment to introduce new measures to address the province's booming contraband tobacco trade. Ontario has Canada's worst contraband tobacco problem, with 1 in 3 cigarettes purchased in Ontario contraband. The province had previously committed to new measures in each of the last three budgets, but had not previously implemented any.

"We welcome the budget's commitment to introduce new measures to address contraband tobacco in Ontario," said Gary Grant, a 39-year veteran of the Toronto Police Service and national spokesperson for the NCACT. "We've long urged the government to take action on illegal cigarettes which fund organized crime. We hope that the province moves forward on these measures as soon as possible to help make our communities safer."

Ontario Budget 2015 proposes a number of new actions, including:

• Exploring the regulation of non-tobacco manufacturing materials, including acetate tow, a material used in cigarette filters. This will make it harder for criminals to produce illegal cigarettes.
• Increased powers and resources to the Ontario Provincial Police (OPP) to focus on the link between organized crime and contraband tobacco.
• Making it easier to stop, detain and search vehicles suspected of smuggling tobacco.
• Making Ministry of Finance officials Peace Officers to enhance their opportunities to pursue contraband tobacco criminals.

Contraband tobacco is any tobacco product that does not follow all provincial and federal regulations or does not pay all required excise taxes. It is often sold directly to consumers through a drug dealer system. The RCMP estimates that about 175 criminal gangs use it to fund their other illegal activities, including guns, drugs and human smuggling. There are also more than 300 "smoke shacks" that illegally sell contraband in major communities in Ontario and Quebec. Illegal cigarettes are often sold in resealable plastic bags of 200 sticks. These "baggies" can cost as little as $8 each.

"In implementing these new measures, we hope that Ontario looks to what has worked in other jurisdictions, especially Quebec," said Grant. "Quebec has demonstrated that effective anti-contraband measures can have a meaningful effect on illegal cigarette levels. There, local police have been given power to investigate contraband tobacco offences, and are provided the financial resources to do so. Municipalities are even able to keep proceeds from fines. The results? Since introduction, contraband tobacco levels have been reduced by half."

Beyond funding organized crime, contraband tobacco is also a major drain on the public purse. The government has recognized this previously, including highlighting the matter in the fall economic update. Contraband tobacco was also identified as a key area of loss to the underground economy in the Drummond report. The Canadian Taxpayers federation has estimated that illegal cigarettes cost Ontario taxpayers as much as $1.1 billion in lost revenues each year. Similarly, the Drummond report highlighted the impact of contraband tobacco on revenue loss in Ontario.

"As Ontario moves forward, it will be important to remember that addressing the provinces illegal cigarette problem is a complicated matter, and the province should anticipate the need to revise and bolster its response on a regular basis," continued Grant. "Organized crime groups involved in the trade will not easily give up on such easy profits. In particular, the province should be mindful not to further disrupt the regulated market as it works to get contraband tobacco under control. The proposed ban on menthol cigarettes is an example of that, which could move 300 million more cigarettes a year to the illegal market. There's no sense in giving a boost to contraband tobacco while introducing new measures to address it."

On Monday, NCACT appeared before Ontario's Standing Committee on General Government to speak on Bill 45, the Making Healthier Choices Act, which places a ban on flavoured tobacco, including menthol. Grant spoke at length on the serious impact Bill 45 will have on strengthening the province's underground economy in illegal tobacco as there is a direct link between the banning of any tobacco product and the illegal market. NCACT recommended that the ban should be pending real and substantial success in combating illegal cigarettes.

"These commitments are a step forward in dealing with Ontario's massive contraband tobacco problem," concluded Grant. "But there will be many more ahead as we work to stop an easy source of cash for organized crime. It will be important for government to remain focused on this issue. We look forward to working with government towards this end."

About NCACT
The National Coalition Against Contraband Tobacco is a Canadian advocacy group formed with the participation of businesses, organizations and individuals concerned about the growing danger of contraband cigarettes. NCACT members share the goals of working together to educate people and urge government to take quick action to stop this growing threat.

The members of the NCACT are: Association des détaillants en alimentation du Québec (ADA), Association des marchands dépanneurs et épiciers du Québec (AMDEQ), Canadian Chamber of Commerce, Canadian Convenience Stores Association (CCSA), Canadian Manufacturers and Exporters, Canadian Taxpayers Federation, Canadian Tobacco Manufacturers Council, Conseil du patronat du Québec (CPQ), Customs and Immigration Union, Échec au crime Québec, Fédération des chambres de commerce du Québec (FCCQ), Frontier Duty Free Association (FDFA), National Convenience Stores Distributors Association (NACDA), Ontario Chamber of Commerce, Retail Council of Canada, Toronto Crime Stoppers and United Korean Commerce and Industry Association (UKCIA).

SOURCE National Coalition Against Contraband Tobacco (NCACT)

Michael Powell, (p) 1-866-950-5551, (m) 613-797-7313, (e) [email protected]; Kalene DeBaeremaeker, (m) 613-857-1758, (e) [email protected]