Thank you, sir.
Good afternoon, committee.
My name is Rick Barnum, and I am the recently appointed executive director of the National Coalition Against Contraband Tobacco.
I most recently served as deputy commissioner of the Ontario Provincial Police and had an over 30-year career in law enforcement. During my career, I spent most of my time combatting organized crime. I saw first-hand how lucrative the contraband tobacco trade can actually be.
The Criminal Intelligence Service of Canada estimates that contraband tobacco and cannabis have a cost of over $12 billion in health care, lost productivity, criminal justice and other direct costs.
The RCMP estimates that there are over 175 criminal gangs involved in the illicit trade of contraband tobacco. These gangs make millions of dollars a day off contraband tobacco, which they use to fund their other illicit activities, including illegal firearms, drugs such as fentanyl, and human trafficking.
To combat this important funding source for organized crime groups, in 2014 the government passed Bill C-10, which introduced a Criminal Code offence for the trafficking of contraband tobacco and also a mandatory minimum penalty for the same offence. Both of these tools have been used by law enforcement across Canada since that time to dissuade individuals from participating in the contraband tobacco trade.
Prior to this, many of those charged and found guilty under provincial tobacco tax laws would simply be fined, but the fines would never actually get paid. The Criminal Code offence and penalties associated with this offence have made trafficking of contraband tobacco less attractive for some people.
However, Bill C-5 proposes to eliminate the mandatory minimum penalty for the trafficking of contraband tobacco while keeping the Criminal Code offence. By eliminating the mandatory minimum penalty, the government is removing a tool used by law enforcement to dissuade possible contraband tobacco traffickers.
The government of late has also helped to fuel the contraband tobacco trade by continuous increases in tax on tobacco. History shows us, as was also reported by the Parliamentary Budget Officer, that tax increases without action against contraband tobacco result in a larger black market that directly funds criminal gangs. This is why, after removing one of the law enforcement tools, the government must add another.
First, the contraband tobacco trade continues to grow across Canada without concerted federal action. Illegal cigarettes, manufactured mostly in Ontario, can be found from British Columbia to Newfoundland. To curb the illicit trade, we recommend that the government create a contraband tobacco enforcement team within the RCMP that would help to coordinate enforcement across the provinces. Provinces like Quebec have seen great successes in such a model, in which municipal and regional law enforcement have been coordinated.
Second, further increased taxation on tobacco without action against contraband tobacco will only help to further grow the illicit trade. We recommend that the government resume a prudent approach toward tobacco taxation until contraband tobacco is addressed across the entire country.
Lastly, Ontario continues to be the epicentre of contraband tobacco in Canada. One in three cigarettes purchased in the province is purchased illegally. Criminal gangs make millions of dollars every day from this illicit trade.
To address this core issue, we recommend that the government partner with Ontario in taking action against contraband tobacco. By supporting law enforcement through countrywide coordination and a prudent taxation approach, the government can begin to effectively address Canada's growing contraband tobacco problem. With the removal of one law enforcement tool, the government must add another.
We hope we can count on your support in taking action against contraband tobacco and also against organized crime.
Thank you for your time. I'll be happy to take any questions.