Calls for aggressive action to stamp out illegal tobacco

Opposition politicians and interest groups say governments need to take much more aggressive action to halt the contraband tobacco trade in the wake of a National Post investigation that has revealed an industry virtually out of control.

Dirt-cheap contraband cigarettes have been flooding the market over the past decade, accounting for 30% of the total Canadian market and nearly 50% in Ontario, according to various estimates. Experts worry it is to blame for a levelling off of smoking rates that had been plummeting for years.

A large proportion are smuggled across the border from plants on the U.S. side of the Akwesasne reserve near Cornwall. Much of the rest are produced on three First Nations reserves in Ontario and Quebec, where tobacco is seen generally as a positive force that has brought jobs and increased wealth.

"The problem is getting near a tipping point," said Mark Holland, the Liberal public safety critic. "If contraband tobacco becomes too prevalent, it just becomes socially acceptable.... If we cross that line, if we have that tipping point, it will be almost impossible to stamp out."

Some critics argue that lowering taxes on legal cigarettes is the answer, while others urge a variety of measures to strangle the underground industry.

Sophia Aggelonitis, Ontario's Revenue Minister, said in an interview that she takes the issue "extremely seriously" and suggested that her province — which has been lambasted for lack of action on the file — may introduce further measures.

"I know we can do more and I am constantly looking at how we can make this better," Ms. Aggelonitis said. "This is a file that is one of my top priorities, and I'm taking a very serious look at it."

The federal response has focused largely on policing the border near Cornwall and targeting organized crime involved in tobacco. New initiatives announced in May include sniffer dogs at sea ports, aimed to detect imported contraband, and a planned public-education campaign.

Anti-smoking advocates have long been calling for measures to more directly undermine the manufacturing plants, such as outlawing the sale of cigarette papers and filters to the factories, and doing a better job of intercepting raw tobacco shipped to them. They also advocate putting more pressure on U.S. authorities to crack down on rogue plants in New York state.

Neither Vic Toews, the Public Safety Minister, nor Keith Ashfield, the Revenue Minister, was available to discuss the issues, their spokespeople said on Thursday. They offered up written responses to a handful of questions instead.

The federal Revenue Department noted that selling raw tobacco to contraband factories is already illegal, but did not comment on outlawing supply of other ingredients.

As for lobbying the U.S., Mr. Toews's office pointed to a July agreement between the Minister and Janet Napolitano, the U.S. Homeland Security Secretary, to develop a "shared vision" of border security. A news release issued at the time, however, made no mention of contraband tobacco.

Mr. Holland said the federal government should be in talks with First Nations leaders, developing a mutually respectful way to replace the cigarette business with other employment.

The legal tobacco industry, convenience stories and others advocate lowering taxes to make contraband less attractive, a measure that antismoking groups argue would be "disastrous." The lower-tax proponents include Luc Martial, a former official with those anti-smoking organizations and Health Canada, who now does consulting for tobacco-related businesses.

Mr. Martial said he believes the high levies promoted by his former colleagues — to deter smoking — caused the contraband problem in the first place, and cutting them is the only way to solve it. He recalls an RCMP officer telling him in 2000 that the force would never be able to stop more than 5% of black-market cigarettes.

"We know we cannot stop contraband tobacco [without lower taxes]," he argued. "If you can't stop it, then don't create it, don't wage a war you can't possibly win."