Canadian C-stores Demand a Freeze on New Tobacco Regs, Taxes

Gadbois Michel TORONTO — Encouraged by recent reports that the Canadian federal and Quebec governments are shifting their focus on tobacco strategy to the problem of contraband, the Canadian Convenience Stores Association (CCSA) applauded the move and reminded officials that their best approach is to stay away from any new regulations or taxation on legal tobacco that would weaken the fight against the manufacturing and distribution of illegal tobacco products.

The association, which represents 27,000 retailers nationwide, is asking the Federal and Provincial governments to adopt a freeze on new regulation or taxation of legal tobacco products until the authorities have significantly reduced the contraband tobacco rate to under 10% for a sustained period.

“We are pleased that both the federal and the Quebec governments have recognized the problems associated with contraband tobacco and its implications on so many facets of society. But one thing is clear: this is the worst time for governments to come up with new laws, regulations and taxes on legal tobacco that could only increase the lure of contraband and undermine the efforts of authorities. Our governments must refrain from the urge to increase taxes until the contraband situation is under control,” said Michel Gadbois, senior vice president of the CCSA.

He added, “There is clearly much work to be done if we expect to meet our target of 10%, especially in Ontario where the government has yet to come up with a plan and does not see the fight against contraband as a priority.”

The CCSA advocates that most new tax or regulation on legal tobacco—like the recent Bill C-32 outlawing flavored cigarillos–is making the illicit market more attractive to smokers. “As history shows us, excessive taxes are the root cause of contraband tobacco, benefiting criminals and depriving governments and legal convenience stores of millions of dollars in income,” said Gadbois.

The group emphasized that the contraband situation is far from being resolved. “Of the 400 illegal smoke shacks and more than 50 cigarette production factories operating in Canada without permits, none has yet to shut down,” he said.

In an effort to put a “face” on contraband, the association is mailing a replica Ziploc baggie of 200 contraband cigarettes to all MPs and MPPs in Ontario and Quebec. “The visual of the baggies is a reminder to our leaders that every day illegal cigarettes are sold in smoke shacks, delivered to kids at school and sold out of the trunks of cars in parking lots in communities throughout their province,” said Gadbois. “Illegal bags of cigarettes like this replica sell for as little as $15 with no age checks or government control. In comparison, a similar quantity of legal cigarettes sold by licensed and tax collecting store owners can cost close to $80. Is it any wonder why we have a growing problem that is affecting our communities on so many levels?”

The replica contraband mailing includes information about the realities of contraband including:

  • Small business bankruptcies: Close to 2,300 family-owned community convenience stores mostly in Ontario and Quebec have closed their doors last year due to the growing black market.
  • Youth access to cheap tobacco: Youth smoking rates are no longer declining with some reports suggesting they are increasing due to the easy access of cheap illegal tobacco.
  • Organized crime: The RCMP has identified 175 different groups involved in the trade of contraband tobacco across the country, most of which are operating in Ontario and Quebec. Their dealings often go on to include alcohol, drug and firearm smuggling.
  • Lost government revenue: Governments across Canada lose more than $2.4 billion annually in total government tax revenue.

“Unfortunately, all the government legislation and efforts designed to control and regulate the legal market are rendered useless when contraband becomes readily available in communities across our country. With this mailing, we’re asking our politicians to take serious action and crack down on the illicit trade that impacts us all,” added Gadbois. “We need to see progress on this front…and soon.”

The CCSA has developed a basic mission to promote corporate social responsibility and represent “Responsible Community Retailing” and has developed the We Expect ID world-class age-testing program for all employees in the channel. The CCSA works to promote and foster professional business practices, standards and ethics throughout the C-Store industry and provides training, education and guidance to its members.


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