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Canada’s growers still seek a way out

Canadian politicos miss billions in illegal smokes trade that they created

By David Williams, Editor

The soap opera that is Canadian tobacco continues to churn like the life story of home-grown butter.



Last year we did a story on the Canadian tobacco farmer, whose industry has crumbled around him and was seeking a way to exit the business. The growers were hindered by ever-escalating governmental restrictions on tobacco cigarette use and a recalcitrant attitude toward a buyout plan.



In the time since that article, things have not improved at all.



Canada is now the home of one of the world’s biggest illegal cigarette smuggling operations. That was emphasized recently when the RCMP said that their seizures of illegal cigarettes this year to date – and as of this writing, it is late February – was three times higher that all of the previous year. Canada is flooded with smokes that Canada’s government is not seeing a penny of tax on.



Why? Because the Canadian Government, in their never-ending quest to the be most regulated nation on earth, has undergone a systematic disemboweling of the Canadian tobacco industry, capped off by excise taxes on cigarettes so high that it cost nearly $10 Canadian to buy a pack legally.



Now, news sources are reporting that illegal sources for smokes are so plentiful that it is easier to buy illegal cigarettes in school than it is to buy illegal drugs. The pack of choice for teens is a clear plastic bag with up to 200 sticks in it – the shopping bag for illegal cigarettes, made outside the country or on the native Indian reservations and brought into the country, and sold for $5 to $8 a bag.



When Canada made it so expensive to smoke, the black market saw an opportunity and is cleaning up – big. Do you think this type of thing would have gotten so large if the excise taxes on cigarettes were more like the U.S. government’s 39 cents a pack?



Farmers, frustrated and desperate, have recently discovered that the government has once again left them out in the cold. The 2008-2009 federal government budget proposal released this month has excluded any buyout package, leaving growers with anger and well-cultivated disappointment in dealing with their elected officials.



Growers have demonstrated with several gestures. They have left a bale of tobacco out in front of their homes with the trash to demonstrate its decreased value as a commodity. They have given tobacco to the Six Nations tribe in Ontario, which likely makes it into the illegal smokes the government is flooded with. That is against the law in Ontario.



And the Ontario Flue-Cured Tobacco Board has once again come back from good-faith negotiations with the government with nothing.



Tobacco production is shrinking globally, and Canada is a prime example of it. A government that has cruelly turned its backs on its own people and blindly continues a failed policy that promotes crime needs to shoulder much of the blame for this morass. The same chest-thumping politicos who point to the country’s declining smoking rate and sneer that tobacco is dying in Canada need to understand that people are going to die along with the leaf – good, honest farmers who pay taxes and get nothing for it.



The Ottawa government claims that its high tax rate on cigarettes is the prime reason smokers are quitting, especially teens. But a report from the watchdog group Campaign for Tobacco-Free Kids said that a tax policy that will truly reduce the number of smokers needs to start at the $10 a pack level. No government anywhere is even close to that kind of taxation level for tobacco products.



So how effective is the tax-them-out-of-it plan? It works well for elected officials who fatten government coffers with money from an extremely small minority of the population. The Canadians love the tax revenues, and are getting used to spending them. That leads to the classic argument – where will the tax money come from when smokers quit or die?



You can guess the answer.