Illegal cigarette seizures are up in N.S. while tobacco tax revenues drop

Richard Cuthbertson · CBC News

· Posted: Apr 20, 2025 11:00 AM EDT | Last Updated: 1 infinitesimal ago

Nova Scotia baccy enforcement officers seized a grounds fig of amerciable cigarettes past twelvemonth and laid dozens of charges, an effort that comes arsenic provincial baccy taxation revenues person dropped importantly successful the past fig of years.

The seizures are being credited to stepped-up investigations by Service Nova Scotia officers moving with the RCMP, but Jill Balser, the curate successful complaint of the department, acknowledges contraband whitethorn beryllium eating into the province's bottommost line.

"Yes, we are seeing taxation revenues impacted by folks that are accessing contraband products," Balser said.

Last year, officers moving for Service Nova Scotia's audit and enforcement part seized 6.1 cardinal cigarettes, a 38 per cent leap from the twelvemonth anterior and good implicit treble the fig successful 2022. The figures from the section bash not relationship for baccy seized by police. 

At the aforesaid time, baccy taxation revenues person been sliding. From 2011 to 2021, revenues were reasonably stable, but since past person dropped by much than a third, a $76-million decline, according to provincial fiscal statements.

Anti-smoking advocator Cynthia Gallard, the longtime enforcement manager of Physicians for a Smoke-Free Canada, has intimately watched baccy taxation revenues, cigaret income and smoking-rate statistic crossed the country.

The declining taxation revenues successful Nova Scotia reflector what's happening successful galore different provinces. In Newfoundland and Labrador, for instance, baccy taxation revenues dropped 48 per cent implicit a three-year period, according to figures Gallard gathered.

Smoking rates person declined, she notes, but that's not all. Even a decennary ago, she said, galore young radical who smoked were inactive lighting up cigarettes. These days, they are vaping. Older cigaret smokers proceed to die, their ranks unfilled by younger generations.

The terms quality betwixt ineligible and amerciable cigarettes is ample due to the fact that contraband avoids steep national and provincial taxes. In 1 caller tribunal case, a justice noted cigarettes being sold astatine a Cole Harbour, N.S., fume store going for $60 a cartoon, compared to upwards of $150 connected the ineligible market.

Gallard said she doesn't quality there's a contraband baccy problem. She besides doesn't quarrel with numbers successful a study sponsored by a convenience store relation that recovered contraband apt accounted for 38 per cent of the marketplace successful Nova Scotia, and adjacent much successful immoderate different provinces.

But she maintains the contented has agelong been "weaponized" by those who argue against measures aimed astatine deterring smoking specified arsenic higher taxes, packaging restrictions and wellness warnings.

There is, however, a caller inducement to ace down, she said, pointing to the precocious approved tribunal colony that volition spot 3 baccy companies wage much than $24 cardinal to provinces and territories seeking to recoup smoking-related health-care costs.

Some of the wealth volition beryllium paid upfront, but the bulk of it volition travel implicit galore years. The woody is structured truthful that 85 per cent of the companies' after-tax profits successful Canada volition spell to the provinces and territories implicit 5 years, a percent that volition past diminution successful consequent five-year chunks until the afloat magnitude is paid.

In short, lone done a "functioning" ineligible marketplace volition wealth travel to provincial coffers, Gallard said.

"Provincial governments truly person each crushed to smarten up and to wage much attraction to contraband, starting now," she said.

While enforcement efforts whitethorn person risen successful Nova Scotia, 1 probe came nether scrutiny earlier this year. The lawsuit progressive a Millbrook First Nation set councillor, Chris Googoo.

The justice successful the lawsuit called it an "odd investigation" due to the fact that officers didn't instrumentality the other steps needed to beryllium Googoo really owned and controlled the fume store that was raided. She acquitted Googoo of the amerciable baccy charges.

Tobacco companies person agelong sounded the alarm astir contraband cigarettes. However, they've besides been implicated. 

From the precocious 1980s to the mid-1990s, a fig of manufacturers were accused of shipping cigarettes to the U.S. that were past smuggled backmost into Canada successful bid to debar excise taxes. At the aforesaid time, they pointed to contraband problems to person governments to little taxes.

Danny Fournier, the elder manager of illicit commercialized prevention astatine baccy shaper Rothmans, Benson and Hedges, said successful an interrogation helium understands Canadians mightiness distrust the assertions of baccy companies that amerciable cigarettes is a superior issue.

But helium said helium saw the occupation from the constabulary broadside of things successful his erstwhile relation heading contraband baccy enforcement operations for the Sûreté du Québec, that province's provincial constabulary force.

There's nary uncertainty the contraband commercialized is controlled by organized transgression that cares astir wealth and small else, helium said, and radical request to look nary further than predominant large constabulary busts.

"Yes, we're a baccy company," helium said. "I don't spot we'd marque much sales, much product, fixed the marketplace — the marketplace is simply a declining market. But bringing backmost that wealth from the underground system backmost into the morganatic economy, everyone volition payment from that."

He pointed to Quebec, which helium said has been effectual successful combating the problem, suggesting the state has recovered "that saccharine spot oregon that balance, if you will, betwixt awareness, enforcement and taxation."

Quebec's baccy taxes are little than different provinces, but it has besides been lauded for its enforcement efforts. At the aforesaid time, it's seen smaller declines than different jurisdictions successful its baccy taxation revenues implicit the past 4 years.