Burn the fields (Part 2)

If you believe the latest results from the Canadian Tobacco Use Monitoring Survey (CTUMS), slightly fewer than 5 million people, representing 19% of the population aged 15 years and older, are smokers. There is no indication if those figures are based on the legal sale of tobacco products or if black market sales would raise those figures significantly. I suspet, however, that smokers buying on the black market have not been included.

The Ontario Ministry of Health and Long-term Care claims provincial tobacco taxes produced $1.452 billion in the 2004-2005 fiscal year. In the next fiscal year, 2005-2006, following yet another increase in sin taxes, provincial tax revenues dropped from $1.452 billion to $1.379 billion, a decline of 73 million dollars. Over the same period, combined federal and provincial tax revenue on tobacco dropped from $7.605 billion to $7.086, a drop of 517 million dollars.

However, says Dr. Atul Kapor, president of Physicians for a Smoke Free Canada, “There is a growing gap between the amount of cigarettes that Canadians say they are smoking and the tobacco tax revenues collected by federal and provincial governments.”

A report from Imperial Tobacco in October 2006 suggests that a quarter of the cigarettes consumed in Quebec and Ontario, are supplied by the black market. Reporters from the Toronto Star confirmed this estimate by using undercover shoppers to demonstrate just how easy it is to get cheap cigarettes in Toronto. Some sources suggest the sale of contraband cigarettes might be as high as 40%. Is anyone surprised?

The RCMP website says: “The sale of illegal tobacco products often benefits criminal organizations. The profits are used to: finance drug trafficking in Canada; purchase illegal weapons; and fund other illicit activities.

They also point out that, “These activities affect the safety and security of our communities and our children. Buying and selling illegal tobacco has other negative consequences for Canadian society, including, eroding respect for the law and federal and provincial governments losing millions in tax revenue.”

According to the Ontario Tobacco Research Unit, "Taxation of tobacco is an effective policy for preventing and reducing cigarette consumption. However, the widespread availability of contraband cigarettes can undermine the effectiveness of this policy, negate the intended health benefits of tobacco taxation and reduce taxation revenues."

The simple truth is that confiscatory taxes and biased regulation do undermine public respect for the law.

Prohibition did not work in the States because a large segment of the population refused to accept the premise that “Big Brother” knew what was best for them. Prohibition, and the law of unintended consequences, contributed significantly to a surge in criminal activity, including smuggling and the illegal manufacture and distribution of alcohol. Those laws were repealed.

Taxation, as a tool for enforcing public policy, can have only a limited effect. There is a point where people will rebel and strike back. They will do so by ignoring attempts to control their behaviour through confiscatory taxes and draconian regulations on a product that is still perfectly legal.

A “smoke free Canada” is a pipe dream. Not everyone will simply quit smoking because of usurious levels of taxation. Many will simply turn to the underground economy with a shrug of the shoulders and a quiet: “Screw’em.” The danger is that this largely justified cheating may well spread to other areas of public morality.

Quote of the Day
Thank heaven, I have given up smoking . . . again! God! I feel fit. Homicidal, but fit. A different man. Irritable, moody, depressed, rude, nervy, perhaps; but the lungs are fine. ~A.P. Herbert