The OCSA has been actively working with the provincial government to address the issue of contraband tobacco. As we have discussed in the past, one of the key reasons contraband flourishes is due to high tobacco taxes. For this reason, the OCSA greatly appreciates the Ontario government recognizing this issue and halting the proposed $4.00 increase that would have potentially driven even more customers toward the illegal market in 2019.
In their 2018 Fall Economic Statement, the provincial government weighed in on the illegal tobacco market broadly, highlighting several concerns that advocates in our channel have been expressing for years.
The availability of illegal, untaxed tobacco undermines Ontario’s tax system, creates an unfair business advantage, and compromises the health and public safety of Ontario families. Canada’s line-by-line review estimates illegal tobacco accounts for $750 million in lost Provincial revenue annually.
Of course the identification of concerns is moot without action and after the OCSA was invited to meet with senior staff prior to the release of the Economic Statement, we are pleased with their commitment to small businesses.
“Sudden and sharp increases to tobacco taxation rates,” the Economic Statement reads, “have played a role in pushing individuals into the illegal market.”
The government also announced that it will launch a public awareness campaign about the risks and consequences of participating in the illegal market and plan a comprehensive review of tobacco regulation and enforcement in general.
The OCSA will continue to advise on and pursue ways to curb contraband cigarettes and is hopeful that the government will continue to take the issue seriously. All members of our industry should be particularly attentive to this issue heading forward and make their valuable voices heard when necessary.