A smokin’ Dalton McGuinty will sue ‘big tobacco’

Ontario Premier Dalton McGuinty is considering another “about face” on a smoking related issue. After ruling out the idea only two years ago, McGuinty's government is now clearing the way to sue tobacco companies for money allegedly spent on health-care costs for smokers.

Attorney General Chris Bentley is proposing legislation that would give the province legal standing to sue tobacco companies directly, to recover expenses ostensibly incurred when people are treated for smoking-related illnesses. It would allocate liability among the companies by market share.

Bentley alleges the annual cost to the health care system in Ontario is 1.6 billion dollars. He told a news conference. "The issue is, should those who have illegally caused the harm be held accountable?"

Frankly, if they did anything illegal, I think they should be held accountable. But, I also think they’ll have a hard time proving allegations that tobacco companies acted illegally in a court of law.

For decades, after the first concerns about the adverse long term effects of tobacco use were formulated, tobacco was, and still is, a legal substance. It has been legal to grow and process tobacco. It has been legal to manufacture cigarettes and other tobacco products. It is legal to sell or otherwise distribute them to the public. And it has been legal for the Canadian public, including minors, to use tobacco products.

So, just what did the tobacco companies do that was illegal?

Allegations that tobacco companies mislead people about the dangers of smoking don’t really hold water. Is there anyone out there who isn’t aware that smoking may be bad for their health? The government certainly knew. The first surgeon-general's report in the US linking smoking with lung cancer was released in 1964.

Yet, aside from passing draconian bans and extorting money from smokers, they took little action. And, if the tobacco companies profited from the death and disease supposedly caused by smoking alone, then the government is equally complicit in the deception and must also be held accountable.

It has to be noted that, in the last fiscal year (2007-2008), the provincial government collected 1.2 billion dollars in tobacco taxes from Ontario’s smokers. Over the past ten years, the province has raked in over 9.9 billion dollars in tobacco taxes while the feds have extorted a whopping 26.4 billion dollars from those same smokers. And, that’s not counting provincial or federal sales taxes

According to the Imperial Tobacco web site, all levels of government in Canada collected approximately $8.7 billion in taxes from the sale of tobacco products in 2004. It also notes that: “On average in Canada close to 70% of the price of a carton of cigarettes goes to taxes.”

Senior levels of government actually receive, in taxes, several times the profit of the tobacco companies annually. They are already the biggest beneficiaries of public spending on tobacco products. And yet they clamour for more.

The latest McGuinty cash grab attempts to emulate the MSA (Master Settlement Agreement) state governments in the U.S. reached in 1998. State governments agreed to a $245 billion (U.S.) settlement with tobacco companies, to be paid from future earnings over an extended period of time.

But, here’s the kicker. The MSA cost the tobacco companies nothing. Zip. Pas rein. Nada.

Part of the agreement allowed the tobacco companies to raise prices to cover the costs of the settlement. It was, in fact, a hidden tax on smokers, collected by the tobacco companies and then funneled through the MSA to state governments.

Nor did the payments from the MSA go to cover the health care costs of smokers. The money was used to build bridges, roads, golf courses and a host of other non-health related projects. In addition, many states have borrowed heavily, in the form of bond issues, against future earnings from the MSA.

The agreement reached in the US, in fact, creates a paradox where state governments are dependent on future sales of tobacco products while at the same time they are committed to reducing tobacco consumption. If cigarette consumption drops, so does revenue from the agreement.

Said Michael Perley of OCAT (Ontario Campaign for Action on Tobacco), in reference to the anticipated lawsuit: "We could be looking at a $50 to $60 billion amount."

Mr. Perly is dreaming in Technicolor. It will be much more difficult to prove their allegations in a court of law than it has been in the court of public opinion. The government will have to use real evidence, not anti-smoker slogans and suspect science. And, they won’t be able to control the court like they control the media.

And, it will be interesting to hear the government explain, to the court and the public, their money-grubbing complicity in the whole affair.