Recent seizures and declining tobacco tax revenue suggest Saskatchewan not immune to western expansion of illegal tobacco
MONTREAL, Sept. 25, 2023 /CNW/ - Recent seizures of contraband cigarettes and a sharp decline in tobacco tax revenue suggest Saskatchewan is not immune from a growing illegal tobacco problem in western Canada, one that demands immediate government attention.
"Saskatchewan has traditionally had one of the lowest rates of illegal tobacco in Canada. However, there is growing evidence the province is falling victim to a major western expansion of the illegal trade. The government will need to move quickly to address this or else it risks ending up in the same situation as Alberta and British Columbia, which now both have an enormous problem," said Eric Gagnon, Vice-President of Legal & External Affairs at Imperial Tobacco Canada (ITCAN). "This is serious criminal activity run by organized crime, with the proceeds used to fund other criminal activity."
On August 31, a traffic stop by the Saskatchewan Highway Patrol (SHP) resulted in the seizure of 1.9 million illegal cigarettes. In June, the Saskatoon Police Service announced their largest ever illegal tobacco seizure (950,000 cigarettes). Meanwhile, in November 2022, an SHP stop found 5.4 million illegal cigarettes, and a month later the SHP, RCMP and Ministry of Finance seized another 6.6 million illegal cigarettes.
"Our experience suggests these seizures are the tip of the iceberg. While we commend the efforts of law enforcement to arrest the flow of illegal tobacco into Saskatchewan, we fear the market is rapidly expanding," stated Mr. Gagnon.
Further evidence of an expanding illegal trade can be found in the province's 2022-23 Public Accounts, which reported tobacco tax revenue of $164,263,000 compared to the budget forecast of $198,900,000. Both in terms of the dollar value of the shortfall ($36.4 million) and percentage of projected revenue achieved (83%), this is the worst performance for Saskatchewan since at least 2013.
''In the second half of 2022, following an alarming decline in legal tobacco sales in Alberta and BC, we commissioned Abacus Data to conduct an independent market assessment. They estimated an illegal market share of 36% in Alberta and 34% BC ? higher than anything we have previously seen for those provinces and now the highest rates in Canada. The Public Accounts and recent seizures suggest Saskatchewan may be seeing a similar expansion," said Mr. Gagnon.
At minimum, ITCAN recommends the Saskatchewan government partner with the other western provinces on a joint law enforcement effort to keep illegal tobacco from flowing into the region, ideally with an interprovincial task force dedicated to illegal tobacco interdiction.
"The illegal tobacco market deprives the government of significant revenues to fund provincial priorities, hurts small businesses, finances criminal gangs, fosters criminal activities, and provides youth with easy access to affordable tobacco products. Recent developments underscore the urgent need for action," said Mr. Gagnon. "Illegal tobacco enforcement must be made a priority before the situation gets out of control, as is happening now in Alberta and BC."
Imperial Tobacco Canada is Canada's leading tobacco and vaping products company and is part of the world's most international tobacco group: BAT. BAT is a global multi-category consumer goods business, operating in over 180 markets. Our vision is to build A Better Tomorrowtm by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products for our consumers.
Our strong foundations, together with our capacity for cutting-edge innovation, are a platform for us to build more sustainable products for our adult consumers, and a more sustainable business for our colleagues, shareholders, and communities.
SOURCE Imperial Tobacco Canada