Study: High Tobacco Taxes Not A Deterrent

A study published Wednesday by a Montreal business school using Canadian federal data suggested lowering tobacco taxes had little effect on consumption.

Canadian tobacco taxes have a package of 20 selling for about $9 in Toronto as the federal tax authorities, customs officials and police grapple with a burgeoning contraband cigarette market. Packs of cigarettes can easily be purchased for as little as $2 each in Toronto, decimating legitimate store sales.

The Canadian Convenience Stores Association asked the HEC Montreal business school to study what happened in 1994 when the federal government slashed cheap tobacco taxes.

HEC Montreal Associate Professor Jean-Francois Ouellet used data collected by Statistics Canada on smoking trends and found tax rates had minimal effect on usage, the release said.

CCSA Vice President Michel Gadbois said that was evidence the government was costing itself revenue while having no impact on smoking rates.

“The time has come to put this myth to rest and to decrease excessive tobacco taxes in order to eliminate … the scourge of contraband tobacco endured far too long because of the unproven and unfounded fear that it would encourage people to smoke,” Gadbois said. “For this, the contraband market is currently doing fine on its own by selling cheap cigarettes to kids in high school courtyards.”


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