I know that this would not be popular. Experience has shown, as I pointed out earlier, that it was a successful approach in 1994, even though the nature of the contraband was quite different. The fact remains, though, that its manifestations are the same. The incredible gap from $6… I think it is irresponsible to say that, at $6 a carton, as opposed to $75 or $70 a carton, there is just no point in fighting it and we may as well give up. Even if all the taxes were removed, it would be $6, compared to…
So, I think we need to clearly understand what exactly we are talking about. I see this as a temporary measure that could be taken in order to determine what share of the illegal market we could get back—by reducing the rate of taxation. It's important to understand that there are retailers out there who are suffering, and here we have a market expanding exponentially. Also, we don't want this market to go beyond 50, 60 or 70 per cent. So, something must be done.
We are trying to develop ideas and this is one that could be effective, but it must be temporary. One thing is for certain: without controlling the market, taxation has proved the kind o effect it has on two occasions. It creates a tempting parallel illegal market. I know that is not a popular thing to say, and people are always telling me: “You're not politically correct”. So what! That's the reality. It's not the only option, but as soon as you mention it, everyone says how awful it is, that you can't do that, that it's terrible. But look what happens when you raise taxes: ultimately, you are not even able to control the product entering the country.
So, do consider that among other options; don't just dismiss it. Let us not automatically shut the door, saying that it's impossible. Because, at some point, we will have to get a message out there to our customers and to smokers. Why would they come back to this market? Do you honestly believe that, in three months time, we will be in a position to completely cut off the flow, and that no illegal product will be entering the market anymore? It will take at least a year before we can begin to control the product coming into Canada.
And what is going to be happening in the meantime? How far are we prepared to let the illegal market expand? That is the reality. It's unpleasant to have to say so, as I freely admit, but that is the reality of the market at this time. The market hasn't dropped; it has done nothing but expand for the last three years.
First of all, how far do we think it has to grow? Second, if people don't take this action and we find other solutions, that's great. From the standpoint of the retailer or the manufacturer—or anyone—the higher the taxes, the better the margins for the seller. That is a market reality. So, we are not talking about cutting specific amounts; we are just talking about restoring a legal market.
The logic is as simple and crude as is the reality that stares us in the face every day.