Is the Quebec government addicted to tobacco taxes?

MONTREAL, Nov. 13, 2014 /CNW Telbec/ - If published reports of the provincial government's intention to raise tobacco taxes comes through in December's budget update, it will be the third increase for Quebec adult smokers in 2014.

"It is neither fair nor effective for 20 per cent of the population to support government deficits," said Nadine Bernard, spokesperson for Imperial Tobacco Canada. "Tobacco is an easy target for governments looking for revenue, and they can't seem to resist the temptation. We saw a first increase by the federal government in February and a second increase in June by the Quebec government, it's not even Christmas and they're at the trough once more."

The Government of Quebec may think that it has contraband tobacco under control, but history shows that the negative impact of excise shocks in the legal market will hit from 12 to 18 months after the increases. This is when it could contribute to bringing contraband up to a higher level, like the province saw a few years ago. With illegal tobacco estimated at 15%, the Government of Québec is already losing more than $200 million each year because of illegal tobacco sales. Increasing taxes on tobacco products will only make a bad situation worse and undermine the measures taken to address the issue. There are more than 200 smoke shacks in Quebec that are ready to meet the increased consumer demand that this tax increase will generate.

"What is most discouraging is that the government isn't learning from its mistakes," said Bernard. "In a fragile market like Quebec, every tax increase on the legal tobacco market increases the incentive for adult smokers to turn to the black market for tobacco products; a market where no taxes are collected, no laws are applied, cigarettes are sold to kids and criminality is promoted. It's simple economics. Each tax increase promotes smuggling and criminality and that's the bottom line."

 

SOURCE: Imperial Tobacco Canada

Media relations : Nadine Bernard, spokesperson, Imperial Tobacco Canada, 514 932-6161, ext.2222