Good morning, Mr. Chair, and thank you. I appreciate the opportunity to speak with you today.
I am a spokesperson for the National Coalition Against Contraband Tobacco. I'm also the chair of the Toronto Crime Stoppers program and a retired 40-year veteran of the Toronto Police Service.
The coalition's mission is to raise public and government awareness of the seriousness of the problem posed by contraband cigarettes. Our 13 members represent a broad spectrum of organizations, including retailers, industry, and law and order organizations.
Contraband tobacco is cigarettes and other products that do not comply with Canada's tobacco regulations. It is manufactured in illegal factories that straddle the Canada-U.S. border. More than 50 illegal manufacturing sites operate in Canada.
Contraband tobacco is distributed in a number of fashions. It is readily available at more than 300 smoke shacks that operate outside of government regulation. It is also sold through a vast network of smugglers in communities across Canada. They bring these cigarettes directly to the doorsteps of consumers, or act as street vendors, selling cigarettes out of the trunks of their cars.
A carton of illegal cigarettes can cost as much as $70 less than the legal product, but carries none of the regulatory display or packaging requirements. Indeed, illegal cigarettes are often sold directly to consumers in clear, resealable plastic bags.
This price disparity, paired with the fact that contraband dealers don't check for ID, has made illegal cigarettes a prime source for youth smoking. In fact, a recent study by the Centre for Addiction and Mental Health indicated that 43% of cigarettes smoked by Ontario high school students were illegal, flagging contraband availability as a reason why youth smoking rates in the province have remained relatively high.
Contraband tobacco's price tag for consumers may be low, but it has proven to be extremely lucrative for the criminals who make it and sell it. The RCMP estimates that there are more than 175 organized criminal gangs that use contraband as a cash cow to finance their other illegal activities, including drugs, guns, and human trafficking.
It should be an important government objective to reduce the prevalence and availability of illegal cigarettes, as the social costs, as outlined above, are very high. However, the strength of the contraband tobacco market also brings serious financial impacts to the Government of Canada. Canada loses as much as $2.4 billion a year in tax revenue--$1.1 billion from the federal government--because of the contraband tobacco market. Every dollar the government loses to the illegal market represents money in the pockets of some of society's least desirable elements.
There is much to do to reduce the prevalence of illicit tobacco in Canada. The coalition suggests three courses of action focusing on reducing the supply of and demand for illegal cigarettes.
First, we need to create a Canada-Ontario-Quebec government task force on illegal cigarettes. Enforcement is important but cannot alone solve the contraband tobacco problem. The RCMP estimates that only 5% to 6% of the $13 billion contraband tobacco trade is being stopped.
The illegal cigarette problem is one that crosses provincial and departmental lines and it is important that our approach and strategy reflect the scope of that challenge. To do so, the Governments of Canada, Ontario, and Quebec should strike an interdepartmental task force that coordinates response to illegal tobacco. Such a task force will allow for more effective communications between jurisdictions, greater information sharing, and more effective response to the contraband. The criminals who run the illegal tobacco trade operate without regard to borders. We should not allow ourselves to be hampered by those borders.
Second, we need to expand the scope of existing anti-contraband tobacco enforcement task forces. The Cornwall Regional Task Force has demonstrated that collaboration among federal, Ontario, and Quebec police agencies can yield tremendous results. We should build on this and create a broader task force of law enforcement officials from Canada, Ontario, Quebec, and the United States.
Stiffening penalties and broadening seizure powers for police will make enforcement efforts even more effective. The government made a platform commitment for a new anti-contraband RCMP task force of 50 officers. Such resources, especially if tied to greater interjurisdictional coordination, are an important step towards addressing this problem.
Finally, it is important to target the supply of illegal tobacco by inspecting and then shutting down illegal cigarette factories and enforcing Health Canada regulations in smoke shacks. We should inspect the 50 illegal manufacturing sites in Canada. When they are not in compliance with regulations, they should be shut down. There are at least 300 smoke shacks operating within Canada, usually located within a short drive of most Canadian cities. They are the prime source for contraband tobacco and should also be inspected regularly to ensure they're complying with Health Canada regulations. When they are not, they should be shut down.
Thank you for your time.