OCSA: Increasing Ontario Tobacco Taxes Will Boost Contraband Sales

HST will make cheap, untaxed illegal tobacco even cheaper, the Ontario Convenience Stores Associations maintains.

May 18, 2010

TORONTO, ONTARIO - The Ontario Convenience Stores Association (OCSA) warned earlier this week that if the Harmonized Sales Tax (HST) is introduced as planned on tobacco products, it will cause tobacco prices to rise by 8% and divert millions of dollars in taxes to organized crime groups.

Currently, tobacco sales are exempt from Ontario??s eight percent Provincial Sales Tax (PST) and are subject instead to a Provincial Tobacco Tax (PTT).

Members of the OCSA met yesterday at Queen??s Park to deliver a 4,000-name petition from Ontario retailers to the government requesting that it prevent the HST from applying to tobacco sales.

"With organized crime groups controlling nearly 50% of all tobacco sales in Ontario, bringing in the HST without changes will be like throwing gasoline on a fire," said Dave Bryans, President of the Ontario Convenience Stores Association. "We??re asking the government to temporarily lock-in existing high cigarette prices by reducing Provincial Tobacco Taxes (PTT) until it takes action and reigns in the contraband cigarette problem."

The OCSA??s plea has earned the endorsement of several lawmakers.

"Toronto Police Chief Bill Blair has told me that contraband tobacco is the stock and trade of organized crime, and the money it generates is used to buy the guns and drugs that are threatening our neighborhoods," said MPP Peter Shurman. "When you add another 8% tax to legal cigarettes on July 1st, it doesn??t take a rocket scientist to figure out what that??s going to do. If you let HST increase the profit from contraband tobacco, you??re going to see a direct increase in drugs and guns on our streets."

Contraband tobacco sales have grown rapidly in Canada and have undermined youth anti-smoking initiatives. A 2009 study by the Canadian Convenience Stores Association of Ontario revealed that 30% of cigarette butts found near school grounds were contraband tobacco.

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