Tobacco Smuggling Costs Billions

Cigarette manufacturers estimate that tobacco smuggled across Canada costs billions in lost taxes, according to a report to Parliament, reports Western Standard.

“The excise reporting gap was estimated to be on average $400 million of federal excise revenue for the tax years 2014 to 2018,” the Cabinet wrote in an Inquiry of Ministry tabled in the Commons. The $400 million figure included tax revenue lost to contraband of all kinds.

“How much does the government collect in tobacco taxes annually, and what is the amount of federal tax revenue that is lost from the sale of illegal, untaxed tobacco?” asked Conservative Member of Parliament Philip Lawrence.

“Illegal tobacco costs around $2 billion annually in lost tax revenue with that money diverted to some of Canada’s most notorious organized crime groups,” wrote Ralf Wittenberg, Imperial Tobacco Canada CEO. “Despite this, the federal government has barely mentioned illegal tobacco since 2015, let alone taken any measures to address it.”

“Canada’s illegal tobacco problem is now a national issue that spills beyond our borders, with illegal Canadian product turning up in the United States, Mexico, the Caribbean and Central America,” said Wittenberg. “Domestically, after several years of relative stability, the illegal market is growing again.

“This has been driven mainly by persistently high rates in Ontario estimated at 35 percent to 40 percent and a recent explosion in British Columbia, where we estimate the rate has grown to 35 percent.

“Numerous reports from law enforcement agencies, think tanks and media have drawn clear links between illegal tobacco and other criminal activities, including drug and weapons trafficking.”