Ontario Government Reverses its Own Policy with Increases in Tobacco Taxes, Exacerbates Contraband Issue and Ensures Negative Impact on Finance and Health

MONTREAL, April 28, 2017 /CNW/ - The 2017 Ontario budget, with its additional tax of $2 a carton on cigarettes and another $8 over the next two years, is a complete flip-flop on previous policy and a boost for individuals and groups involved in the country's largest illegal tobacco market. The Finance Minister reversed the province's policy on tobacco taxation a year after putting it in place.

Imperial Tobacco Canada is committed to working with government on responsible legislation and fiscal policy, but believes these measures will only push more people to the illegal market.

"For a province that has the highest contraband rate in Canada and the second highest in all of the Americas, this increase is both irresponsible and irrational," said Eric Gagnon, Head of Corporate and External Affairs, Imperial Tobacco Canada. "The Wynne government is caving to the agenda of radical anti-tobacco lobbyists, an agenda that completely ignores public health and the realities of Ontario's illegal tobacco trade. Now that these groups have had their way, it's time to take action because these increases will only exacerbate the significant contraband problem in the province."

Ontario is the hub of Canada's contraband tobacco trade, losing an estimated $1 billion in tax revenue each year. The province is also home to more than 20 illegal tobacco factories and hundreds of smoke shacks with ample production capacity. Illegal cigarettes are produced in facilities that are unlicensed, unregulated and uninspected, and because these products are not taxed, they are purchased illegally for a fraction of the price of legal products.

"If health groups are truly concerned with the health of Ontarians, then we invite them to join in the fight against the illicit trade, which provides cheap cigarettes to youth," says Gagnon. "It's time to stop turning a blind eye to the growing criminal trade that's taking place, not only to help curtail tax evasion, but for the fiscal equity and safety of all Ontarians living in the communities where these criminals operate. This reckless, head-in-the-sand approach to tobacco taxation only benefits organized crime."

"Ontario has poured gasoline on a fire of its own making and has gone back on a commitment it made in its 2016 budget for scheduled, moderate tobacco tax increases over time. The question now is whether or not Ontario will take decisive action to put that fire out? We have seen none so far," concludes Gagnon.

SOURCE Imperial Tobacco Canada

Media Information: Marie-Emmanuelle Khoury, Torchia Communications, 514-288-8290 ext. 214, [email protected]; Kathleen Stelmach, Torchia Communications, 416-341-9929 ext. 227, [email protected]