Cigarette tax could increase contraband problem, provincial finance minister warns

Stratford Needs manager Trisha Hartling displays the store’s selection of cigarettes. Sarah Seeley photos.
Stratford Needs manager Trisha Hartling displays the store’s selection of cigarettes. Sarah Seeley photos.
By Sarah Seeley
Feb. 25, 2014

The federal government’s decision to increase cigarette taxes might encourage Canadians to purchase contraband cigarettes, says P.E.I. finance minister.
Wes Sheridan made the comment after federal finance minister Jim Flaherty announced Feb.12 the taxes for a carton of 200 cigarettes will rise from $17 to $21.03.
The federal government estimates it will receive $3.3 billon in revenue from the tax increase between 2014 and 2019.
But as the increase in contraband might put pressure on the RCMP, Sheridan said.
“It does make it difficult for those dealing with illegal cigarette sales.”
The RCMP will have to increase procedures for cracking down on contraband operations, he said.
“We’ll have to do something to cover that off.”
Charlottetown RCMP Sgt. Andrew Blackadar said the RCMP doesn’t know if there will be an increase in contraband.
“It is too early for the RCMP to say what may happen.”
The Charlottetown RCMP is not taking any extra precautions, he said.
“We will continue to enforce the Excise Act as we always do, but we are not taking any extra steps at present to do extra enforcement.”
UPEI economics professor Jim Sentance said the tax increase was unnecessary.
“The consensus was not well thought out. You’re back into encouraging smuggling.”
The federal government made the change in cigarette tax during a period when the crime rate is falling, he said.
“Conservatives seem to like putting people in jail because being tough on crime appeals to a lot of people.”
Stratford Needs manager Trisha Hartling said customers have been complaining about the store’s cigarette prices.
“I don’t pay attention to prices, but you can really tell when they jump.”
Cigarette prices are different in each store, she said.
“Our prices are $2 cheaper than Esso’s.”
When customers complain, Hartling tells them Needs has no control over the price regulations.
“There’s nothing we can do about it.”
The rate of contraband cigarettes will not increase, she said.
“I think no matter how expensive cigarettes are, people are going to be selling contraband cigarettes for less.”