OKBA applauds government action against contraband tobacco

Association wants to see more resource allocation to anti-contraband initiatives from the province.
Kenny Shim (Photo: Jaime Hogge)

The Ontario Korean Businessmen's Association (OKBA) says that it acknowledges and appreciates recent actions taken by the Ontario government to help stem the flow of contraband tobacco across the province and pleased by the recent news stories of the seizure of illegal products and meaningful charges and levies against contraband offenders.

"It is encouraging to see specific legal actions being taken against traffickers, and we hope this is a precursor to a tougher stance on this issue.  Since the contraband tobacco problem emerged more than a decade ago, we have lost close to 1000 members, many of whom have closed their businesses permanently due to unfair competition from illegal sources", says spokesperson Kenny Shim, OKBA president.   

The OKBA has long been lobbying government to bring political and public awareness to the cigarette trafficking problem that continues to flourish while legal store owners pay the price. 

According to OKBA, most Ontarians are not aware that contraband tobacco hurts everyone, costing the provincial treasury an estimated $750 million in lost taxes every year.  Contraband activities ignore effective government implemented anti-smoking regulations, including the restriction of sales to minors.  According to police, many organized crime groups who profit from contraband tobacco also traffic illegal drugs, weapons, and can be involved in human trafficking.

On the legal side of Ontario's tobacco sales, licensed retailers follow all government mandates and pay taxes, and in return they expect the Ontario government to help communities stay safe, and law-abiding store owners stay in business, through increased anti-contraband police enforcement.

In anticipation of the 2024 budget, the OKBA looks forward to increased resource allocation to anti-contraband initiatives.  This will not only support small business owners across Ontario but will also bolster the provincial treasury for the benefit of all Ontarians.

“After years of advocating against contraband tobacco, the OKBA sees these recent seizures and arrests as a positive sign, but more must be done.  We will continue to encourage the Ontario government for increased resources for law enforcement to support anti-contraband initiatives as we move forward into 2024,” Shim says.

OKBA’s support for the government’s action of contraband tobacco follows on the recent release of a study by the Convenience Industry Council of Canada (CICC), conducted by EY Canada, that examined the impact of contraband tobacco was having in Canada. According to that study, it is a growing pan-Canadian problem, one fueled by organized crime and that results in governments and Canadians losing out of billions of dollars.

The study estimates the size of the contraband tobacco market is as high as 69% in Ontario, 45% in British Columbia, and 44% in Newfoundland. 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. 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,” says Anne Kothawala, president & CEO of CICC upon the release of the study.

British Columbia earlier in September says that the $229 million decline in tobacco tax revenue was a direct result of the growth of the illicit tobacco market in the province.

When the Government of British Columbia released its 2022-2023 public accounts data, the province generated $531 million from tobacco taxes, which was much less than thee expected $760 million. This difference of $229 million was the biggest loss for any province since at least 2013.

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