Sue the tobacco companies, smokers will pay

On September 29, the Ministry of the Attorney General (Ontario) issued a press release announcing that the province had filed a lawsuit against a group of tobacco companies seeking damages “for past and ongoing health care costs linked to tobacco-related illness”.

The 50 billion dollar lawsuit was launched under the Tobacco Damages and Health Care Costs Recovery Act, passed earlier this year. The legislation was approved unanimously by Queen's Park, meaning all parties are on record as supporting the lawsuit. Six other provinces have indicated their intention to initiate similar legal actions, although only two have actually filed .

According to the press release, Ontario is seeking $50 billion in damages, representing health care costs borne by Ontario taxpayers since 1955. It claims that tobacco-related health care costs are now estimated at more than $1.6 billion per year in the province.

The lawsuit is a transparent attempt to emulate a similar government cash grab in the US where over 40 states collectively sued the tobacco companies over similar issues. The result of that action was an out of court settlement called the MSA (Master Settlement Agreement). The tobacco companies agreed to pay roughly 250 billion dollars over 30 years from future earnings based on annual sales. The annual payments were apportioned among participating states.

The MSA cost the tobacco companies nothing, of course, since the deal allowed them to increase tobacco prices and pass the costs on to the consumer. Although it was hailed as a major victory against tobacco companies, it was, in fact, an agreement to indirectly tax tobacco consumers. The tobacco companies simply collected the tax and passed it on to the individual states.

Canada's smokers should not expect any better treatment from their governments. They will not force the tobacco companies into bankruptcy; not with billions of dollars in tax revenue at stake. So that means tobacco consumers will wind up footing the bill, just as they did in the US.

But, perhaps the most troubling aspect of the lawsuit is the blatant hypocrisy of the government action.

Both the provincial and federal governments profit handsomely from the tax revenue generated by the sale of tobacco products. When this rather well-known fact was pointed out to Ontario's Attorney General, Chris Bentley, he responded: "Even if we related the two, the amount paid out in health-care costs far exceeds the amount any government has collected for taxes."

Mr. Bentley has his facts wrong.

According to figures provided by the anti-smoker group, Physicians for a Smoke Free Canada, the total cost of medical treatment for smokers nationwide was $4.36 billion in 2006. That’s a hefty chunk of money.

But, for the 2005/2006 fiscal year, revenue collected by federal and provincial governments was $7.09 billion from taxes on tobacco products, not including sales taxes. Health care for smokers cost the “taxpayer” nothing.

But, smokers are taxpayers too. And, ignored is the the fact that smokers, in addition to the punitive tobacco taxes extorted by their government, make the same contributions to health care costs as any other Canadian.

And, just for the record, while the anti-smoker cartel and their puppets in government moan about the billion dollars plus in profit posted by the tobacco companies, government is making those profits look like chump change. In 2003, Canada's three largest tobacco companies made an estimated 1.53 billion dollars in profit. Combined government tax revenue was 7.05 billion dollars for the same year; over four and a half times the profit earned by the three tobacco companies combined.

The government's greed is mind boggling.

First, they extort tens of billions from smokers in tobacco taxes which they spend like drunken sailors on everything but health care. Then they demand that tobacco companies pay them billions more in compensation for health care costs; money that can only come from the same smokers who have already been forced to pay usurious levels of tobacco taxes for decades.

For decades, the tobacco companies have been vilified for putting profit before public health. But, government has been even more guilty of exploiting tobacco addiction for financial gain than the tobacco companies.

And, there's one more incontrovertible fact. If government was really convinced that smoking and exposure to secondhand smoke causes tens of thousands of deaths annually, they could have stopped it at anytime over the past half century. They could have passed a law.

They chose not to do so. Instead, they took the cash.