Industry advocates press Ontario Government to address contraband tobacco

Call for investment comes ahead of the upcoming provincial budget.
Kenny Shim (Photo: Jaime Hogge)

Industry advocates are rallying to bring political awareness to the cigarette trafficking problem in the lead up to Ontario's budget. 

The Ontario Korean Businessmen's Association (OKBA) is relaunching its Save Our Stores Campaign and president Kenny Shim spoke at the Ontario pre-budget consultations in Toronto last week.

In a release the organization said  it "is making good on their promise to press the Ford government to finally crack down on illegal tobacco sales in the province; a problem that has caused hundreds of small businesses to close permanently over the last decade."

The OKBA, which represents more than 900 c-store members across Ontario, maintains that legal store owners are paying the price for illicit tobacco. The group says that it has lost close to 1,000 members in the past decade "many of whom have closed their businesses permanently due to unfair competition from organized crime groups selling contraband."

Industry advocates says c-store owners are frustrated by the ongoing inaction, and are calling on  the Government of Ontario to follow through on commitments in the "Addressing Unregulated Tobacco" section of last year's budget, including modernizing the Tobacco Tax Act to expand enforcement partnerships with interested provincial, local, and First Nations police services.

"Many of our store owners see organized crime groups selling contraband tobacco right out in the open," said Shim "Police must be empowered to get more involved, and we know this would make a positive difference, because we hear from our counterparts in Quebec that the contraband situation has improved there. We want the Ford government to give police the powers they need to crack down on this serious problem."

The Province of Quebec spends $20 million annually on contraband enforcement, whereas Ontario reportedly spends $1 to $2 million. And according to the National Coalition Against Contraband Tobacco in 2019, Quebec's investment in tackling the illegal tobacco trade has yielded a 10:1 return, with tobacco tax revenue increasing by $180 million annually without any tobacco tax increases. It is estimated Ontario is losing up to $750 million annually due to unregulated tobacco sales. 

According to police, many organized crime groups that profit from contraband tobacco are also involved in other illegal activities. 

"We believe the public needs to know about the unfair challenges our store owners face," says Shim. And the massive tax losses for all Ontarians. As licensed retailers, we follow all government mandates, and we pay our taxes. It is extremely frustrating that contraband dealers are still not more seriously dealt with. We expect the Ford government to take a firm stand against illegal tobacco, to help our communities and law-abiding store owners stay in business."

Dave Bryans in a blue suit standing against a beige wall
Dave Bryans

His thoughts are echoed by other industry stakeholders. In his pre-budget submission, Dave Bryans, CEO of the Ontario Convenience Stores Association, said, "Illegal untaxed tobacco continues to infiltrate every community in Ontario through an elaborate distribution and production network that is well known to all levels of government."

He added that while his members are encouraged by the government’s inclusion of anti-illicit tobacco measures in past budgets and pleased to see some activity in the areas of new enforcement measures, the rate of illegal tobacco remains the highest in Ontario than any other province.  

Bryans told the Standing Committee on Finance & Economic Affairs "the answer to solving Ontario’s deficit cannot come at the price of another increase in tobacco taxes. This only increases the appeal of the illegal market and sends tobacco users to cheaper alternatives. Customers will not curb smoking following a tax increase, with 70% saying they would find another, cheaper source for their product."

He also wants to see provinces empower law enforcement to address the issue and work collaboratively to stop the trade and sale of illegal tobacco. 

The Convenience Industry Council of Canada is emphasizing to governments at all levels that this is an issue that requires a multi-faceted approach across the nation. In a recent column, CICC president and CEO Anne Kothawala wrote: "There is an abundance of evidence that points to the need for action and we have developed a tangible solution—5-Point Plan – that can be adopted by governments immediately."

The group launched a public education campaign – – to raise awareness about how illegal tobacco impacts Canadian communities.

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