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The Comprehensive Strategy to
Discourage Smoking
April 5, 2001
Today, the Government announced a comprehensive strategy to improve the health
of Canadians by reducing tobacco use. The strategy consists of:
Increased funding for tobacco control programs --
with a special focus on reaching out to young people and fighting the marketing
practices of the tobacco industry;
Tobacco tax increases to discourage smoking; and,
A new tobacco tax structure designed to break the
link between tobacco prices and smuggling.
Increased funding for tobacco control programs
Health Canada will invest $480 million in a
comprehensive, integrated and sustained tobacco control strategy over the next
five years.
Approximately $210 million of that total will be
directed towards anti-tobacco mass media campaigns, with a particular emphasis
on youth and other high-risk groups.
To gauge the success of the strategy, the
Government has set out clear, measurable 10-year smoking reduction targets. They
are to:
- Reduce the number of people who smoke from 25
to 20 per cent of the population.
- Decrease the number of cigarettes sold by 30
per cent.
- Increase retailer compliance with
tobacco-sales-to-youth laws to 80 per cent
Sharp Increases to Tobacco Taxes
As of April 6, 2001, a combined
federal-provincial tax increase of $4 per carton of cigarettes is proposed to
take effect in New Brunswick, Prince Edward Island, Nova Scotia, Ontario and
Quebec.
An excise tax increase of $1 per 200 grams of
fine-cut tobacco and $1 per carton of tobacco sticks will similarly take effect
on the same date.
Effective April 6, 2001, the surtax on the
profits of tobacco manufacturers will increase to 50 per cent of corporate
income tax payable from the current rate of 40 per cent.
A New Tobacco Tax Structure to Reduce the
Incentive to Smuggle
The new tobacco tax structure is designed to
reduce the incentive to smuggle Canadian-produced tobacco products back into
Canada from export markets – the main source of contraband in the past.
It is proposed that on April 6, 2001, a
two-tiered export tax on Canadian tobacco products will take effect -- with a
$10-per-carton rate applying to exports up to 1.5 per cent of a tobacco
manufacturer's annual production and a $22-per-carton rate on exports that
exceed the 1.5-per-cent threshold.
It is proposed that on April 6, 2001, a tax will
be applied on Canadian tobacco products delivered to duty-free shops in Canada
and abroad, as well as on tobacco products sold as ships' stores – that is,
for inventory sold to airlines and cruise ships.
It is also proposed that on April 6, 2001, a tax
will be applied on imported tobacco products delivered to Canadian duty-free
shops.
Effective October 1, 2001, the traveller's
exemption will be amended to ensure that tax is imposed on tobacco products
imported by Canadian residents returning to Canada.
Monitoring and Assessment
To help ensure that the tax measures are
effective and to determine the size and timing of future tax increases, $55
million over 5 years will be provided to:
Canada Customs and Revenue Agency ($32.7 million
over five years);
The Royal Canadian Mounted Police ($9.5 million
over five years);
The Department of Justice Canada ($9.6 million
over five years); and,
The Department of the Solicitor General ( $3.2
million over five years).
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