Tobacco Facts.

The ability of the federal and provincial governments to control tobacco distribution “is collapsing around us,” the head of Imperial Tobacco Canada said Thursday.

“Over one-third of the Canadian tobacco industry has been handed over to an illegal, unregulated, unenforced and untaxed free for all,” Imperial president and CEO Benjamin J. Kemball said during a speech to the Economic Club of Canada.

Tax-free, smuggled cigarettes are widely available for a fraction of the legal price, and are often smuggled through First Nations reserves, the RCMP have said.

Imperial said illegal tobacco accounts for 30 per cent of the cigarettes sold in Canada, more than 40 per cent of those sold in Quebec and 48 per cent of those sold in Ontario.

Federal and provincial governments lost about $2.4 billion in taxes to smuggled cigarettes in 2008, the company estimated.

In late 2008, Ontario Auditor General Jim McCarter reported that his province’s estimated tax loss in 2006-07 was $500 million.

“We believe it could be double that today,” Kemball said.

To address the flood of illegal products, he suggested the following:

* The appointment of a senior government official to take charge of the anti-smuggling program.
* Enforcing the laws.
* Controlling the supply of raw material and machinery.
* Applying existing taxes.

Kemball suggested there could be a revenue-sharing agreement on a First Nations tax, equivalent to the provincial tobacco tax.

“This would facilitate tobacco control across Canada, including the reserves that could benefit from the proceeds of this tax. Let’s bring everyone involved to the table, from the health authorities to the First Nation communities,” he said.

Community, business and health groups, as well as retailers, are also calling for government action, Kemball said.

“It’s not every day that you get tobacco companies and health groups asking for the same thing,” he said. “When you do, isn’t it time to listen?”
Copyright © 2009 Cbc

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