Canadian Prime Minister Jean Chretien Announces Plan to Combat Tobacco Smuggling

Canadian Prime Minister Jean Chretien has announced a comprehensive plan to combat the growing black market in smuggled cigarettes, which has become a significant challenge for his administration. The plan aims to cut tobacco taxes and increase police patrols along the U.S. border to close the price gap between legal and illegal cigarettes, making it difficult for smugglers to operate. Chretien has faced criticism from health groups, who fear the tax will encourage smoking, and government leaders, who say the contraband cigarettes are costing businesses and governments billions of dollars, fueling organized crime.

Key Takeaways:

• The black market in smuggled cigarettes in Canada has grown at a blistering pace, with contraband cigarettes accounting for about 40 percent of the nation's total tobacco trade.
• One in every three packs of cigarettes sold in Canada in 1993 was contraband, and the figure is even higher in Ontario and Quebec.
• The cross-border smuggling network is largely fueled by the flow of Canadian-produced cigarettes to the U.S., where they are sold tax-free to traders on Canadian Indian reservations.
• Smugglers transport cases of cigarettes across largely unprotected borders, selling them on the streets at almost half the price of legal cigarettes.
• The system is believed to cost federal and provincial governments some $4.5 billion annually.
• Chretien's plan includes trimming consumer taxes on a carton of cigarettes by $3.80 and imposing an export tax of $6 per carton.
• The plan also includes launching the largest anti-smoking campaign in Canadian history, raising the legal smoking age, and setting up a public education program to warn people of the dangers of smoking.

Statistics:

• 40 percent of Canada's total tobacco trade is accounted for by contraband cigarettes.
• One in every three packs of cigarettes sold in Canada in 1993 was contraband.
• The government estimates that the illegal cigarette trade costs them $4.5 billion annually.
• A carton of cigarettes sells for as much as $35 in Canada, making it among the most expensive in the world.

Sources:

• Chretien, Jean. "Quoted in 'Chretien vows to combat tobacco smuggling'." The Toronto Star, May 1994.
• Government of Canada. "Canadian government announces plan to combat tobacco smuggling." Press Release, May 1994.
• MacGregor, James. "Tobacco smugglers thrive in eastern provinces." The Globe and Mail, April 1993.