Malaya – Learn from Canadian experience on tobacco taxes, Marcos urged

By JP Lopez | Malaya

MALAYA_thumbA CANADA-BASED coalition fighting the illicit tobacco trade has called on the Senate to be cautious in considering proposals imposing high excise tax rates on tobacoo products.

The National Coalition against Contraband Tobacco wrote Sen. Ferdinand Marcos Jr. that the Palace-backed sin taxes on tobacco and liquor products would only lead to unabated smuggling that could exacerbate youth smoking and fund organized crime.

Marcos has been very vocal on his position against extreme increase in excise tax on tobacco products, saying it would displace thousands of the industry workers.

The coalition shared Canada’s experience in the war against the illicit tobacco trade, which now has lost a substantial share of the Canadian market as a result of high cigarette taxes.

It noted that on top of losing tax revenues from cigarettes, the illicit trade has also helped fund the activities of criminal gangs in Canada, and increased incidents of smoking among the youth.

“While no two countries are exactly alike, we would like to take this opportunity, while you are in Canada, to share the Canadian experience with illicit tobacco in the hope that it will provide an international perspective for your domestic debate,” the coalition’s chief spokesperson Gary Grant said in the letter.

Marcos and five other senators were in Canada on an official visit for the 127th Inter-Parliamentary Union Conference from Oct. 21 to 26 at Quebec City.

Drawing from the Canada experience, Grant noted that the high price differential between legal and illegal cigarettes and the availability of contraband tobacco has led to an explosion of the illicit trade in his country.

“We believe that this is a truly internationalized problem and, accordingly, we sometimes think it worthwhile to highlight the Canadian experience in this matter with other jurisdictions. As such, we have taken note of developments in the Philippines pertaining to the restructuring of your excise tax system,” his letter said.

Grant said independent estimates show Canada has lost about $2.1 billion in taxes annually to illegal cigarettes.

He said the Royal Canadian Mounted Police estimates there are 175 criminal gangs involved in the trade of illegal cigarettes.

“They use the trade to finance their other illegal activities, including guns, drugs, and human smuggling. And it’s a lucrative business, with Statistics Canada estimating that Canadians spend approximately $2.6 billion annually on contraband tobacco,” Grant said.

He also warned that the low price of contraband tobacco makes them easily accessible to the youth, which is why smoking among young people in the Canadian province of Ontario remains “stubbornly high” despite the government’s strict identification requirements for purchasing cigarettes.

Illegal cigarettes in Canada are sold in re-sealable plastic bags, with a package of 200 costing as much as $90 less than legal product, according to Grant.

“Distribution of contraband tobacco happens in a variety of ways, including through hundreds of illegal “smoke shacks” that are located near major Canadian cities and directly to consumers through a drug-like distribution network,” he said.

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