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Data reveals that the government has foregone $9.2 billion over eight years in tobacco taxes Calculations reveal that government is allocating 313 million cigarettes more to aboriginal reserves than can be legally sold or consumed

Ontario Government Allocates Millions More Cigarettes to Reserves than can be Legally Smoked, Losing Millions in Tax Revenue


By Christine Van Geyn, CTF Ontario Director ——--September 21, 2016

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TORONTO, ON: The Canadian Taxpayers Federation (CTF) released a new report today showing that the Ontario government is allocating 313 million cigarettes more to aboriginal reserves than can be legally sold or consumed by Status Indians. The report examines the Ontario government’s Cigarette Allocation System (CAS) for on-reserve “smoke shacks.” New data on the CAS has been obtained by the CTF from the Ontario Ministry of Finance through a freedom-of-information request (FOI). The CAS is a formula that dictates how much unmarked tobacco can be officially sold in reserve “smoke shacks,” tax-free to Status Indians. The CTF report calculated that every smoker over the age of 15, living on a reserve in Ontario, would have to smoke 61 cigarettes per day, every day, in order for Status Indians to have legally purchased every cigarette provided through the allocation system.
“The problem is obvious to anyone who has driven past signs advertising ‘tax free smokes’,” said Christine Van Geyn, CTF Ontario Director. “The signs might as well read ‘black market cigarettes’ or better yet, ‘tax evasion.’ The over allocation of cigarettes by the government is costing billions in unpaid tobacco taxes.” The report also estimates that the tax loss to the federal and provincial governments from contraband tobacco in Ontario was $1.22 billion last year, and $9.2 billion over the last eight years. Based on the government’s own numbers, at minimum 47 per cent and possibly upwards of 72 per cent of all sales of tax-exempt government allocated tobacco were made illegally to people who are not Status Indians. That means an over-allocation of around 313 million cigarettes. “The Ontario government continues to over allocate unmarked tobacco to reserves, foregoing billions in tax revenue by fueling the illegal black market in tobacco. Meanwhile, the government squeezes law abiding families for every penny of tax revenue they can get, and hike our taxes even further with things like the new tax that will be applied to home heating fuels and gasoline,” continued Van Geyn. “The government needs to look at new ways of enforcing their existing tax laws before coming up with new taxes that will make life more expensive for law abiding Ontarians. A good first step would be to reduce the amount of allocation tobacco.” The CTF’s new report on the Ontario allocation tobacco program can be found HERE.

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Canadian Taxpayers Federation Christine Van Geyn, CTF Ontario Director -- Bio and Archives

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