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Action on Smoking and Health Press Release January 17, 2019
ULTIMATE
HYPOCRISY: TOBACCO COMPANIES FIGHT TOBACCO TAXES WHILE
HIKING CIGARETTE PRICES OTTAWA - New data supplied by Health Canada reveals that tobacco companies have repeatedly hiked cigarette prices for several years while simultaneously fighting off federal and provincial tobacco tax increases. The price increases amount to over sixteen dollars per carton since 2013 and, going forward, they will represent over two billion dollars in lost revenue annually to the federal and provincial governments. Since 2013, the additional revenue of the companies has totaled $4 billion. “The tobacco companies are playing
Canadian finance ministers for dupes by fighting tobacco
tax increases and pocketing billions in foregone tax
revenue obtained through substantial price increases”
said Les Hagen, executive director for Edmonton-based
Action on Smoking and Health. “Federal and provincial
governments are burdened with the enormous healthcare
costs resulting from tobacco use and they should not
allow tobacco companies to rob them of valuable revenue
to defray these costs.” “Finance ministers should respond
with tobacco tax increases that will match or exceed
industry price increases in their forthcoming 2019
budgets. Tobacco companies should not be allowed to cash
in on their objectionable efforts to derail tobacco tax
increases.” Frequent tobacco industry demands
that provincial governments reduce the availability of
contraband (untaxed) tobacco – especially in Ontario and
Quebec – is another example of hypocrisy. “For years
now, Ontarians have heard companies and their retail
front groups demand that taxes must not increase in
order to reduce contraband. Last fall, they helped
convince the Ford government to cancel a planned $4 per
carton tax increase. They claim organized crime is
behind contraband. They say nothing about their own
price increases – as if company price increases don’t
affect contraband levels, but tax increases do. It’s
time for the Ontario and Quebec governments to reject
this industry deceit and hypocrisy and raise taxes to
deter tobacco use,” said Michael Perley, Director of the
Ontario Campaign for Action on Tobacco.
A report commissioned by Health
Canada in 2016 concluded that the federal and provincial
governments must substantially increase tobacco taxes in
order to meet the new national target of reducing
smoking rates to five percent by 2035. The author of the
report—Dr. David Levy of Georgetown
University—recommended that Canadian governments raise
cigarette taxes to represent 80 percent of the final
retail price. Currently
tobacco taxes represent only about two-thirds of the
total retail price of cigarettes.
But
that two-thirds average is far from uniform. Tobacco
companies deliberately blunt the effect of cigarette
taxation by charging less for some brands and more for
others. For example, in Quebec, the 5 most expensive
brands are 2.5 times more expensive than the 5 cheapest
brands. Standardized cigarette pricing is needed to stop
tobacco companies from using price manipulation to
reduce the effectiveness of tobacco taxation.
“The
only way to effectively prevent the companies from using
this type of price manipulation is to impose
standardized pricing on tobacco products,” said Flory
Doucas, co-director of the Quebec Coalition for Tobacco
Control.
“Canadian governments need to impose significant tax
increases on cigarettes if they have any hope of
reaching the 2035 smoking target” said Neil Collishaw,
research director for Physicians for a Smoke-free
Canada. “By taking a restrained approach to tobacco
taxation, Canadian governments are not taking this
target seriously and they are allowing tobacco companies
to skim billions from their treasuries. This revenue
should be used to fund bold and innovative efforts to
achieve the 2035 target of less than 5%.”
Provincial governments are currently suing tobacco
companies to recover decades of health care costs
resulting from industry negligence and deception.
Ironically, the same governments are watching these
companies skim billions in foregone tobacco revenue from
their treasuries. In another report commissioned
by Health Canada in 2017, the Conference Board of Canada
estimated that tobacco use in Canada results in 45,000
deaths and $16 billion in direct and indirect economic
costs each year.
Les
Hagen called on provincial and finance ministries to
give this issue their urgent attention. “It’s deplorable
that Canadian governments are suing tobacco companies
for billions in health care costs while allowing the
same companies to bilk them out of billions in precious
tobacco revenue. When will the federal and provincial
governments wake up and blow away the smokescreen?
Tobacco companies must be held fully accountable
for their deceptive practices including their efforts to
thwart tax increases.” -30- Backgrounder: Tobacco tax and Manufacturer's Wholesale prices, 2015-2019 For further information:
Neil Collishaw,
Research Director, Physicians for a Smoke-Free Canada.
613 297 3590
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