VICTORIA — The governments of British Columbia, Ontario and Newfoundland and Labrador lost up to $2.47 billion in tax revenues over four years due to the growth in illegal tobacco sales, says a convenience industry report.
The Convenience Industry Council of Canada report released Wednesday examined the downward trend in legal tobacco sales in the three provinces since 2019, compared with the rising growth in the underground contraband tobacco market.
It estimated B.C. lost between $215 million and $591 million in tobacco tax revenue to the illegal sales between 2019 and 2022. The convenience industry report made five recommendations, including calling for tougher federal and provincial penalties for illegal tobacco trafficking, increasing police resources to combat contraband tobacco and making the issue a top priority of federal and provincial justice officials.
The report said the contraband tobacco market in Canada has also continued to expand due to"a confusing legal framework" surrounding the manufacturing and sale of cigarettes on First Nations reserves. B.C. strictly regulates the sale, purchase, possession and transportation of tobacco, and the province has taken steps to combat the sale and use of contraband products, said the ministry.
"The major driver of the explosive growth of illegal cigarettes in Canada: the significant price difference between tax-paid legal cigarettes and contraband cigarettes," said the report."Contraband cigarettes may be purchased for only about 40 per cent of the price of legal, tax-paid cigarettes."
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