Illegal Tobacco Study, British Columbia May 2014
Convenience store owners and operators across Western Canada have begun to express growing concern regarding the increase in the sales of contraband tobacco and the resulting impact on their businesses, including the loss of ancillary product sales. But the scourge of contraband tobacco goes beyond the impact of your neighbourhood corner store. Government tax revenues are forfeited in significant amounts. Minors are allowed cheap and unrestricted access to tobacco. The RCMP has reported that contraband tobacco sales are often the precursor to increased gang activity, which has become all too familiar to communities in Ontario and Quebec.
It is for these reasons that the Western Convenience Store Association chose to commission an independent study to determine the current incidence of untaxed tobacco sales in British Columbia. This follows similar studies in Saskatchewan and Manitoba. It is hoped this baseline research will allow WCSA, along with government and law enforcement agencies, to better monitor this issue in the future.
WCSA commissioned NIRIC, a Montreal research firm, to collect and analyze over 6,000 cigarette samples from 48 sites - areas near office buildings, shopping malls, schools and entertainment venues - across B.C. between April 27 – May 26, 2014. With the sample size, the margin of error is below 1.6%.
The definition of contraband/illegal tobacco includes:
• Duty Not Paid: cigarettes on which appropriate government taxes and duty are not paid.
• Contraband: cigarettes without branding, foreign or untaxed (native) brands.
• Counterfeit and suspected international brands were classified under ‘contraband’ tobacco products.
In the study, contraband tobacco made up 17.2% of the total 6.097 cigarettes collected. Results varied from community to community, ranging from a high of 51.6% at Simon Fraser University to a low of 0% at the Kelowna Service Canada Centre. Vancouver, Kamloops and Terrace were found to have an incidence of contraband of 31.8%, 22.4%, and 19.1% respectively.
Comparison with Recent Findings in Saskatchewan and Manitoba
In a recent study in Saskatchewan, contraband tobacco made up 10.8% of the total 4,713 cigarettes collected. Results varied from community to community, ranging from a high of 26.1% at a site in Saskatoon to a low of 0% at Mount Royal Collegiate in Saskatoon. Regina and Saskatoon were found to have an incidence of contraband of 12.2% and 11.1% respectively.
In Manitoba, contraband tobacco made up 14.7% of the total 4,426 cigarettes collected. Results varied from community to community, ranging from a high of 31.4% at a site in Brandon to a low of 1.5% at the Red River College Campus. Winnipeg was found to have an incidence of contraband of 9.2%.
Contrary to a common belief that contraband tobacco is a Central Canadian problem with some incursion into the West via Manitoba, British Columbia is a new front in the battle against this illegal trade. If the 17.1% contraband found at sites tested represents a provincial average, provincial losses in excise tax revenue alone are approximately $120 million annually. This only represents the tip of the iceberg of adverse economic and social impacts associated with this illegal activity.
By reducing the percentage of contraband tobacco consumed, BC can immediately achieve four public policy objectives:
• Reduced access to youth
• Reduced tobacco consumption generally as some will reduce or quit smoking
• Increased public (tax revenue)
• Reduced organized criminal activity
• A fairer business climate for honest retailers
Related Media Stories
The following are some local news stories as of July 17, 2014: