Ontario Convenience Stores Association (OCSA)

Ontario Convenience Stores Association (OCSA)

May 07, 2014 10:22 ET

Despite Election, Toronto Area Retailers Still Hit Hard by Tobacco Tax Increase

TORONTO, ONTARIO--(Marketwired - May 7, 2014) - Ontario's convenience store retailers are warning that efforts to reduce contraband tobacco will be negated by the latest tobacco tax increase, which was implemented even though the provincial budget did not pass last week.

The increased tobacco taxes were put in place as of midnight last Thursday, May 1st. Retailers are doubtful that the government will be able to collect additional taxes with this increase, given the high rate of contraband in the Toronto area.

"This is an irresponsible move by the Ontario government," says Bruce Watson of Mac's Convenience Stores. "We have already seen a reduction in business since the federal increase, and this will drive more customers away from our stores."

Contraband tobacco is sold without mandated health warnings and without age verification checks, to anyone who is willing to buy. The RCMP estimates that over 70 organized crime groups and gangs are affiliated with the illegal tobacco trade. Increased taxes and regulations drive the tobacco market underground, meaning these products are both more affordable and accessible to youth.

Prior to the Ontario budget, retailers presented 20,000 signed postcards to Premier Kathleen Wynne asking that provincial tobacco taxes not be raised.

The Toronto area has illegal tobacco rates as high as 36.4% in some locations, according to a contraband tobacco study released by the Ontario Convenience Stores Association (OCSA) in December 2013. What used to be a rural issue has now moved into the province's urban centres through sophisticated trafficking networks.

"The commitments made to address contraband tobacco feel empty, particularly given that we've seen these measures announced before," reminds Dave Bryans, CEO of the OCSA. "The decision to raise tobacco taxes will push consumers to the black market and support organized crime in the process. This is an extremely short-sighted decision that threatens small business across this province."

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