Up in smoke (Part 2)

Rabid anti-smoker activists will point to an alleged decrease in consumption of tobacco products, insisting that higher sin taxes are having the desired effect and forcing smokers to quit. But, the facts are that the decreases in consumption are based on annual sales figures provided by the tobacco industry. They don’t take into consideration the consumption of contraband, now estimated at between 25% and 40% of the market here in Canada.

The Canada Revenue Agency (CRA) knew the high levels of taxation would create problems: “It has long been recognized that the significant taxation of tobacco products and the potential for profit act as powerful incentives for contraband activity. Such contraband activity results in substantial revenue losses at both the federal and provincial levels, and undermines government health initiatives, which form part of the basis for high excise duties and provincial taxes on tobacco products”.

According to the CRA, and anti-smoker activists, all that’s needed to force smokers to quit is stricter enforcement of laws against contraband; just beef up policing efforts and start putting people in jail. Uh-huh.

But, the government has painted themselves into a corner. This time the cheap contraband cigarettes are not simply cheaper cigarettes smuggled across the border by a hard-nosed criminal element.

More likely than not, the inexpensive, readily available contraband is being manufactured and sold by Canada’s first nations.

And, therein lies the dilemma.

Canada’s first nations are highly autonomous. Like their American cousins, they insist on their right to a large measure of self-determination. And, neither the Canadian nor the American governments want a confrontation with their respective native populations.

Over the past decade or so, the Canadian government has been giving permits to some native bands to manufacture cigarettes. Several successful, and legitimate, businesses have been developed on some reserves, including selling cigarettes in the European market. These ventures have provided a much needed boost to the native economy.

In the US, there are many mail order sites offering tax free cigarettes shipped directly from native reserves. Consumers are expected to pay taxes on these smokes; but natives don’t see themselves as tax collectors for any level of government, save their own.

And, Canadian smokers who buy native cigarettes don’t see them as criminals or thugs. The real criminals are the extortionists in Ottawa, and provincial capitals across Canada, which insist on ever increasing sin taxes to modify the behaviour of a large minority of the population.

Canada’s native community didn’t create the problem. They merely responded to an ill-conceived plan to tax smoking out of existence.

That plan was instigated by tobacco control fanatics and implemented by money hungry governments. It was (is) a tax grab intended to coerce smokers into quitting . . . for their own good, of course. The potential adverse consequences of that policy were (are) ignored.

Smokers, unwilling (and, in many cases unable) to pay the punitive tax burden imposed by senior levels of government, are rebelling.

The result is a growing demand for contraband tobacco products. And with a market conservatively estimated at five million in Canada alone (another 60 million in the US), it’s a demand that will continue to grow.

The federal and provincial governments are now faced with the prospect of declining tax revenue, higher policing costs and the possibility of a confrontation with the native community.

Another unintended side affect of tobacco tax policy is making cheap cigarettes available to young people. The vast majority of tobacco retailers were conforming to laws governing sales of cigarettes to minors. With the growing availability of contraband, kids now have ready access to tobacco that is well within the reach of the teenage budget.

Usurious levels of tobacco taxation are creating as many problems as they were meant to solve. And, this time around, simply rolling back the tax on tobacco by a few dollars won’t work. Many smokers now realize that, even if tax on a carton of cigarettes is reduced by half, they are being ripped off by their governments and the tobacco control cartel pulling the strings.

And, like me, they will be reluctant to pay the extortion demanded by their governments. And, they won’t quit; Nicorettes simply can’t compare to the pure pleasure of a good smoke.