REGINA, SASKATCHEWAN--(Marketwired - Feb. 13, 2014) - Saskatchewan retailers are expressing concern following the recent increase in federal tobacco taxes. Cigarettes in Saskatchewan are among the most expensive in Canada and with the new tax hike, these prices will continue to increase.
"The price gap between legal and contraband tobacco products provides an ideal opportunity for illegal tobacco traffickers to sell their product in Saskatchewan," says Andrew Klukas, President of the Western Convenience Stores Association (WCSA). "This new federal increase further incentivizes traffickers to sell within the illegal market."
In a 2013 study commissioned by the WCSA, a collection of discarded cigarette butts found one in ten butts to be illegal tobacco - otherwise known as contraband.
"The average instance of illegal tobacco was 10% throughout the province-prior to this massive federal tax increase," adds Klukas. "At 10%, you are already losing over $3 million a year in provincial tax revenue."
Contraband tobacco is sold without provincial or federal taxes, providing a cheap alternative to the legal product. The RCMP estimates over 70 organized crime groups are involved with the contraband tobacco trade, often selling drugs and guns alongside illegal tobacco. Illegal tobacco is also more accessible to youth, as it is sold without age-verification checks and at half the cost of legal tobacco. This poses a significant threat to the safety of youth across Saskatchewan.
The recent federal budget had no additional contraband enforcement measures for Western Canada, leaving the provinces to fend for themselves.
"Whereas our retailers are trained to check for I.D., contraband tobacco traffickers sell to anyone who's willing to buy. Contraband is a public safety issues first and foremost, and residents in Saskatchewan should be concerned," adds Klukas.
The WCSA encourages the Saskatchewan Government to maintain the province's current taxation rate as well as seek to include anti-contraband measures in the Tobacco Reduction Strategy. These measures could include increased penalties for contraband offenders and more resources towards educating the public on the dangers of illegal tobacco.
ABOUT THE WCSA
The WCSA is a not-for-profit trade association that represents the interests of over 6,500 convenience store retailers operating throughout Western Canada. These retailers employ more than 40,000 people and contribute over $10 billion in sales to the local economy. Our mission is to foster the success of the convenience store industry in Western Canada by representing the best interests of our members, and the communities they serve.