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.