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NO NEED to make tobacco illegal!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Natives on both sides of the U.S./Cdn border are now operating WAY BEYOND the law on producing tobacco and cigarettes anyway!!!!!!!!
Tax-free cigarettes adding to Ontario's contraband problem
CHRISTINE VAN GEYN, Special to the Toronto Sun
First posted: Wednesday, September 21, 2016 08:59 PM EDT | Updated: Wednesday, September 21, 2016 09:02 PM EDT. Toronto Sun files
Premier Kathleen Wynne knows that contraband cigarettes are a problem in Ontario — costing her government millions each year in lost revenues. But her tough talk doesn’t match her actions.
Let’s start with the tough talk. This past January she announced a whole new department within the Ontario Provincial Police just to deal with contraband smokes. Will it work? Maybe, maybe not. By itself, this probably won’t make the problem worse.
But what of her actions? A month after announcing the new OPP task force on contraband, the Wynne government hiked tobacco taxes by $3 a carton, making illegal cigarettes that much more attractive.
And then there’s the real kicker, the Ontario government allocates millions of tax-free cigarettes to smoke shacks on reserves for sale to Status Indians. In fact, they allocate so many cigarettes to reserves that it’s likely only 122 million out of 435 million cigarettes allocated to reserves are sold to Status Indians.
The leftovers? Sold illegally.
It sounds crazy, but it’s true. The Canadian Taxpayers Federation (CTF) has obtained documents through a Freedom of Information request that shows that Ontario Cigarette Allocation System is sending so many tax-free cigarettes to Ontario reserves that to be consumed legally, every smoker on a reserve over the age of 15 would have to smoke 61 cigarettes a day, every day.
It is painfully clear from these numbers that huge quantities of cigarettes from the government allocation system are being sold illegally to people who are not Status Indians. This fact is even more obvious when billboards for “smoke shacks” and “tax free smokes” are found throughout reservations.
Indeed, based on the government’s own numbers, the CTF estimates that last year, at minimum 47% and possibly upwards of 72% of all sales of tax-exempt government allocated tobacco were made illegally to people who were not Status Indians.
As for the recent tax hikes, there is a relationship between increased tax rates for tobacco and increased contraband. As tobacco taxes have risen, so has the incentive to smuggle, produce and sell tobacco illegally in order to avoid taxes.
The CTF also estimates that in 2014-15 alone, the overall contraband tobacco trade in Ontario cost the federal and provincial governments up to $1.22 billion in lost tax revenue. Over the past eight years, the total tax loss is as high as $9.2 billion.
To make up that tax hole, Wynne turns to hard-working Ontario families with plans like taxing home heating fuels, hiking gasoline taxes, and now possibly even applying a double land-transfer tax for homes outside of Toronto.
Law enforcement is a component in the fight against contraband, but doubling down on enforcement without changing the underlying conditions that fuel the contraband tobacco trade is throwing good money after bad.
One of the simplest steps to fight contraband would be to reduce the number of tax-free government allocated cigarettes given to aboriginal reserves.
The Ontario government should reduce the allocation amount by half, and then conduct a followup investigation to determine if further reductions are necessary.
This is a more sensible — and far less costly — solution than continuing to spend new money on enforcement measures while simultaneously hiking the taxes that drive consumers to the black market. It’s a solution that Wynne needs to consider if she is serious about fighting the black market in cigarettes, getting back some of those lost tax dollars, and keeping cigarettes out of the hands of children.
— Christine Van Geyn is the Ontario director for the Canadian Taxpayers Federation
