Broken down, this translates to tax revenue losses of up to $1.8 billion in Ontario, $591 million in B.C., and $81 million in Newfoundland over the last three years.
“Governments have turned a blind eye to this illegal market,” says CICC president and CEO Anne Kothawala. “Efforts to curb smoking are actively undermined by a thriving contraband market, all while taxpayers are being short-changed, and legal retailers are competing with organized crime.”
In a press release, the CICC notes: “The uptick in illegal sales, which law enforcement agencies, including the RCMP, have previously noted are controlled by organized crime groups, directly corresponds with a sharp decline in the sale of legal products. Legal tobacco sales are down 33% in BC, 20% in Ontario and a staggering 49% in Newfoundland.”
Fred O’Riordan, EY Canada’s tax policy leader and the lead author of this report, says: “Gauging the exact size of the contraband market is difficult, but the evidence in this report clearly shows it is growing and now easily represents at least one-third of the total market in these three provinces, and possibly much more.”
C-gas retailers across Canada are, once again, calling on governments at the federal and provincial level to act on the sale of illegal tobacco.
CICC has long advocated on behalf of the channel.
Now, in light of the findings of the new EY Canada study, the group and its members are outlining several recommendations that include:
- Increasing resources and allowing local police to keep fines and disposal of assets seized as proceeds of crime;
- Increasing police enforcement and Criminal Code penalties;
- Increasing public awareness of contraband tobacco;
- Regular, public reporting of contraband tobacco seizures; and,
- Increasing federal-provincial coordination.
Download the full report below.