Illegal cigarette trade thriving in Quebec and Ontario, new study indicates

MONTREAL (CP) - The trade in contraband cigarettes is thriving in Canada, particularly in Quebec and Ontario, a new study by the Canadian Tobacco Manufacturers’ Council indicates.

The study, released on Thursday, says the trade has cost federal and provincial governments $1.6 billion per year in lost revenues. The majority of the illegal cigarettes are concentrated in Quebec and Ontario. Ontario accounts for 53.8 per cent of the volume and Quebec for 41.1 per cent.

Illegal cigarettes were defined for the survey as cigarettes and tobacco sold by individuals who are not paying the appropriate taxes or duty. Those smoking illegal cigarettes in Ontario has risen to 31.6 per cent this year from 23.5 per cent in 2006. Thirty-seven per cent of smokers in Quebec pull contraband smokes.

The council says traffickers in illegal cigarettes often also sell guns, contraband liquor and drugs.

The council said the source of the contraband tobacco has changed since the 1990s. The trade was based then on popular brands that were exported to the United States and then brought back into Canada and sold without charging tax.

Now the industry is based on tobacco imported in bulk from China and South Africa and then made into cigarettes on aboriginal reserves and sold without taxes.

“About 95 per cent of the cigarettes are manufactured on aboriginal reserves,” said Yves-Thomas Dorval, a spokesman for the council.

“The first place to develop a contraband network is always close to the source.”

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