Increasing Tobacco Taxes
May 11, 2000
Media reports today indicating
discussions between federal and provincial governments to identify a timetable
to raise tobacco taxes – in the interest of public health – are accurate.
While no timetable has been
established, discussions on this matter are ongoing.
This should come as little surprise
since we have always been clear in our determination to get tobacco taxes back
to pre-1994 levels as soon as feasible, without giving rise to a significant
increase in smuggling.
A little history on the issue of
tobacco taxes and contraband is helpful:
In 1994, after a significant surge in
tobacco contraband federal and provincial governments - the governments of
Ontario, Quebec, New Brunswick, Nova Scotia and PEI in particular – agreed on
a coordinated plan to fight smuggling by – among other things – reducing
tobacco taxes.
Under this agreement, tobacco taxes
have been raised by federal and provincial governments in Ontario, Quebec, New
Brunswick, Nova Scotia and PEI five times without a significant upsurge in
smuggling.
In January of this year, the Minister
of Finance wrote to his provincial counterparts to inquire as to the interest in
a more aggressive stance on tobacco tax increases in the interest of public
health and, in particular, to deter smoking among younger Canadians.
The provinces responded with interest
and officials have been meeting since that time to work out just such an agenda.
Among other things, they are relying on the advice of law enforcement officials
as to what steps can taken without giving rise to new smuggling concerns.
At this point, it is premature to
speculate on when and how much tobacco taxes might increase.
Such details would be the subject of an
announcement in the future once an agreement is reached among federal and
provincial officials.
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