Ontario Convenience Stores Association (OCSA) is warning that if the Harmonized Sales Tax (HST) is introduced as planned on tobacco products, tobacco prices would grow by 8%, redirecting millions of dollars in taxes to organized crime groups.
As it stands now, sales of tobacco products are not subject to Ontario, Canada’s 8% Provincial Sales Tax (PST) but rather fall under a Provincial Tobacco Tax (PTT).
Members of the OCSA met this week at Queen’s Park to deliver a 4,000-name petition to the government from Ontario retailers, requesting that it prevent the HST from affecting sales of tobacco products.
“With organized crime groups controlling nearly 50% of all tobacco sales in Ontario, bringing in the HST without changes will be like throwing gasoline on a fire,” said Dave Bryans, president of OCSA. “We’re asking the government to temporarily lock-in existing high cigarette prices by reducing Provincial Tobacco Taxes (PTT) until it takes action and reigns in the contraband cigarette problem.”
Several lawmakers are standing behind OCSA’s appeal.
“Toronto Police Chief Bill Blair has told me that contraband tobacco is the stock and trade of organized crime, and the money it generates is used to buy the guns and drugs that are threatening our neighborhoods,” said MPP Peter Shurman. “When you add another 8% tax to legal cigarettes on July 1, it doesn’t take a rocket scientist to figure out what that’s going to do. If you let HST increase the profit from contraband tobacco, you’re going to see a direct increase in drugs and guns on our streets.”
Sales of contraband tobacco products have grown rapidly in Canada and have undermined youth anti-smoking initiatives. A 2009 study by the Canadian Convenience Stores Association of Ontario revealed that 30% of cigarette butts found near school grounds were contraband tobacco.