New tobacco law will not eliminate contraband

By MPP Toby Barrett

Recently, I debated yet another tobacco bill in the Ontario Legislature. Bill 186 is titled Supporting Smoke-Free Ontario by Reducing Contraband Tobacco. Looking at the name of the bill, I question why the McGuinty government has chosen to merely “reduce” instead of “eliminate” illegal tobacco?

Eight years of tobacco tax hikes have created this crisis. What we see now is an unintended partnership of government policy and the underground economy. To quote Samuel Johnson: “The road to hell is paved with good intentions.”

Growth in the illegal trade of tobacco products has had, and continues to have, broad implications for society since sophisticated international criminal operators are increasingly dominating the picture. To quote the National Coalition Against Contraband Tobacco: “We’re talking about a situation where 175 organized crime groups are smuggling illegal cigarettes, drugs and guns into this province and the McGuinty government is unwilling to act.” In Caledonia you’ll see smoke shacks blatantly located on Ontario government property — on provincial Highway 6, and on Hydro One property.

Allowing this illegal market to flourish for the past eight years has undermined this government’s very own anti-tobacco policy — a policy that was supposed to protect our young people. Instead it allows them to purchase cheap smokes, often containing contaminants forbidden in a regulated marketplace, out of the trunk of a car – no questions asked. Why would a teenagers pay $62 for 200 cigarettes when they can get them for six.
People argue that high taxes are necessary to prevent smoking. The problem is, close to half of the people pay no taxes at all – zero taxes, a zero tax market where consumption rises. Contraband tobacco now accounts for 43 per cent of all cigarettes consumed by Ontario high school smokers.

Government can do better than just ‘reduce’ illegal tobacco. I believe there’s a way to eliminate contraband tobacco. Two years ago, I introduced the Tobacco Tax Reduction Act. This was done by government previously in 1994 to eliminate the motive for illegal use. If tax policy, plus enforcement, education and border control, breaks the back of the illegal trade as it did in the early 1990s, then government can again slowly increase taxes, if it wishes.

This tax-cut solution is not new. In 1994, then Prime Minister Jean Chretien, Ontario Premier Bob Rae and four other provinces realized illegal tobacco was out of control, like it is now. They dropped taxes and shut down hundreds of illegal smoke shacks overnight.

I’ve been involved with the tobacco business in many different roles over many years. I used to prime in the ’70s. I’m not sure if government employees know much about tobacco farming, the movement of raw leaf, processing, let alone manufacturing and retailing.

I’m also not sure bureaucrats are up to the job with respect to dealing with the native tobacco trade. As far as the enforcement end, it’s not going to have any impact unless we give our police the support – the moral support and the financial resources to the do the job. And sadly, I feel the tobacco board which was originally designed to help tobacco farmers move their crop, will now be under pressure to become just an agency of government.

It will be a rough road ahead, now that government has lost control of the tobacco trade.