WHAT Canadian smoker, given the opportunity to save $40 on a batch of 200 cigarettes by buying contraband tobacco instead of government-approved tobacco, would not take advantage of it?
Well, the honest ones would not, you might say, but every honest Canadian, smoker or not, knows that the taxes on tobacco are punitive for smokers and grossly profit-rich for governments because of that. People will avoid such taxes when they can.
The argument in favour of taxing tobacco exorbitantly is that it discourages people from smoking cigarettes. And smoking has now declined to what is probably the hard core of Canadian puffers, but that is more likely to be due to education than it is to high prices. People who want or need to smoke will simply divert the money from some other pleasure or necessity as the price of the habit rises.
Or they will turn to the black market, as an increasing number of them appear to be doing. According to a recent industry report, three out of every 10 cigarettes sold in Ontario and Quebec are contraband, smuggled mostly through Mohawk reserves along the United States border.
When this problem became acute in the 1990s, the governments of Ontario and Quebec drastically cut their taxes on tobacco. This led to a drop in the level of smuggling, but not to a dramatic rise in the number of smokers, which gives credence to the idea that it is education, rather than cost, that is effective.
Today, police say that smuggling of cigarettes is greater than it was in the 1990s, possibly by as much as 10 per cent or more. The government's solution today is to commission a high-tech seal that will give an official stamp of approval to legal cigarettes so that those smokers who may care can be sure they are not buying contraband. The nation can breathe a little easier.
This smuggling, however, brings with it other problems. Where in the 1990s smuggling tobacco was mostly a Mohawk cottage industry, today it involves biker gangs and the Mafia. According to the RCMP, the same smuggling routes that channel tobacco and the profits from that are used to facilitate and finance the traffic in guns and illegal drugs.
Canadians find themselves between a rock and a hard place. Cutting taxes on tobacco would, as it did in the 1990s, reduce smuggling, but anti-smoking groups argue that it would also increase consumption. That may or may not be so, but we truly do not know what the balance here is. Is the health cost of a slight increase in the rate of smoking greater or lesser than the social cost of the immense profits that go to organized crime and the related criminal activity that inspires? Until the government can tell us that, we can have no confidence that it knows what it is doing with this perennial problem.
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