Retailers urge Ontario to join new Quebec commission on tobacco smuggling

Billions in provincial tobacco taxes unpaid since retailers first rang alarm in 2005

OAKVILLE, ON, March 5, 2012 /CNW/ - The Ontario Convenience Stores Association (OCSA), which represents 7,500 retailers in Ontario, urged the Ontario government to become the first to join a new Quebec-led commission being struck to do more to stop the growing problem of tobacco smuggling.

Last week, the Quebec government's Committee on Public Finance called for the creation of a multi-jurisdictional task force made up of representatives from the governments of Canada, Ontario, Quebec, the United States and the Mohawk Nation to help fight tobacco smuggling.

"We'd like to see the Ontario government join this commission right away," said Dave Bryans, President of the Ontario Convenience Stores Association.  "Ontario has pledged to get tougher on contraband tobacco by collecting more of the taxes that are being avoided. That's a good start, but the past decade has shown us that smugglers are adept at evading enforcement, and a long-term solution can only come if governments from Canada and the US work together.  The commission the Quebec government has called for will be an excellent forum to have those talks."

Estimates show that billions in provincial tax dollars have been lost due to the three types of contraband cigarettes sold in Ontario:

1. Cigarettes crossing the border illegally, usually from New York state, where no taxes are collected.
   
   
2. Cigarettes produced on reserves in facilities licensed by the federal government, but no provincial taxes are collected.
   
   
3. Yellow band and peach band cigarettes moving on and off of reserve. Yellow band cigarettes are HST exempt and allowed in unlimited quantities on reserve. Peach band cigarettes are available to all those living on reserve (19+ years), under a quota system of 800-1,000 cigarettes per person living on the reserve.  However, these are often sold off-reserve and no provincial taxes are collected.

"Ontario has promised it is going to cut its sizeable deficit, in part, by ensuring that all cigarette taxes are collected from sales in Ontario.  We look forward to action being taken," added Bryans.  "But that alone is too little, too late. It won't stop the flood of illegal cigarettes coming from New York State and years of inaction have emboldened tax avoiders to such an extent that we now see an entirely new market mushrooming in Ontario where gasoline is being sold on reserves partly or fully tax-free.  Ontario needs to work with its governmental peers on a coordinated effort if we're going to put an end to these illegal activities."

Media inquiries: John Perenack, [email protected] (quick response), 416.238.2576