How to bust black-market tobacco

Ontario has the unfortunate distinction of leading the country in both the production and sale of contraband tobacco. The effects of these illicit activities are vast and harmful — from a health and safety standpoint to a monetary one. But there are a number of innovative solutions, which have already been tried with success in Quebec, that the Ontario government can implement to combat contraband, and move toward a safer province.

Contraband tobacco is a problem across the whole country. The RCMP estimates there are 50 illegal cigarette factories and more than 300 smoke shacks operating within Canada. Additionally, according to the RCMP, there are 175 criminal gangs involved in the contraband network, which creates a gateway to other illegal activities including weapons, drugs, and human trafficking. These gangs are a byproduct of the contraband tobacco industry and threaten our communities’ safety. Aside from the obvious public safety concerns generated from the industry, there are also severe financial burdens associated with it. A report last year from Ernst and Young for the Ontario government shows that the province is losing $750 million annually in provincial tax revenue to the illicit trade.

While every province struggles with contraband, Ontario is the national epi- centre for illegal manufacturing. Within the province, one of every three cigarettes sold are illegal and in Northern Ontario the rates jump to over 60 per cent of the market. The enormous quantities of illegal tobacco being produced in Ontario impacts provinces across Canada. Much of the contraband tobacco stopped in Manitoba, New Brunswick

ONTARIO CAN LOOK TO QUEBEC AS AN EXAMPLE OF SUCCESS.

or Nova Scotia from Ontario.

Given these jarring numbers, it is clear Ontario needs to tackle the contraband market and make it a priority. What can the provincial government do to address this ongoing crisis? Ontario can look to its neighbour to the east as an example of success. Quebec has created a feasible solution that has already been rolled out and has garnered national attention for its success.

In the early 2000s, the climate in Quebec closely resembled that of Ontario originates today. Contraband rates were approximately the same. However, in 2009 the Quebec government passed Bill 59, which took decisive action against contraband tobacco. The changes were so effective that Quebec was able to reduce the share of contraband tobacco from over 40 per cent of the market to around 12 per cent.

The Quebec government made three key changes that made all the difference. First, it created a Contraband Tobacco Enforcement Team of 54 police officers to co-ordinate overall efforts across the province. In Ontario, a similar team has only 18 members but even they are not solely dedicated to investigating contraband tobacco.

Second, Quebec amended its laws to allow all police services to conduct full contraband tobacco investigations. Unfortunately in Ontario this can only be done by the RCMP or Ministry of Finance officials.

Third, Quebec created a program named Accès Tabac, which funds ongoing contraband investigations. Due to these changes, in the last Quebec budget, the province saw a return of $186 million into provincial coffers from legal revenues.

The good news for Ontario is that the provincial government has signalled that it would like to adopt similar changes to combat the illicit trade after over a decade of inaction that allowed organized crime to flourish. While the details are being arranged, it’s clear that there is a gold standard to follow in Quebec. Should Ontario follow in Quebec’s footsteps, organized crime will be addressed and the province will be able to put millions back into essential services that Ontarians rely on.

Quebec showed that it can be done: It saw drastic changes in its contraband tobacco rates and the level of organized crime involved. Unfortunately, those looking to profit from the illicit trade continue to shift their efforts to new markets, such as New Brunswick, Nova Scotia and Manitoba. This issue has always been a federal one, and without a clear plan from the federal government, it will never be completely resolved. However, with Quebec already taking decisive actions, and Ontario possibly following suit, perhaps the federal government will be enticed to finally come to the table, too.

THE CANADIAN PRESS / RCMP The RCMP estimates there are 50 illegal cigarette factories and more than 300 smoke shacks operating in Canada — these contraband cigarettes were seized near Cornwall, Ont.