Cheaper Cigarettes and Contraband

Smokers are price-sensitive, and may seek ways to purchase cheaper cigarettes, particularly as tobacco taxes increase the overall price of cigarettes. One such source is purchasing contraband cigarettes. Contraband is “any tobacco product that does not comply with the provisions of all applicable federal and provincial statutes. This includes importation, stamping, marking, manufacturing, distributing and payment of duties and taxes.”vii, p.12 The RCMP has identified the trade in contraband as a “serious threat to public safety and health.”vii, p. 15 To help identify duty-paid and legally-manufactured cigarettes, a federal excise stamp is required on “all cigarettes, tobacco sticks and fine-cut tobacco products for sale in the Canadian duty-paid market” as of July 1, 2012.viii The federal government has introduced other measures and funded initiatives to reduce contraband tobacco.ix Bill C-10, the Tackling Contraband Tobacco Act, which came into force on April 10, 2015, amends the Criminal Code to add the offence of trafficking contraband tobacco.x

Purchasing Cheaper Cigarettes

Smokers were asked about various sources of cigarettes, some of which may have included contraband, where appropriate taxation has been evaded.

Overall, 8.8%a of smokers reported having purchased cigarettes on a First Nations Reserve in the past 6 months, defined for respondents as “a tract of land that has been set apart for the use and benefit of a First Nations band”. Smokers were also asked about purchasing cigarettes that they believed may have been smuggled, defined as “cigarettes that were not manufactured on a First Nations Reserve, were not manufactured in Canada, do not contain a government of Canada Health Warning message and do not carry a tax stamp. Legally imported cigarettes are not smuggled cigarettes”. However, it is not possible to reliably report the estimate, as too few survey respondents reported purchasing smuggled cigarettes

95% confidence intervals for in-text estimates

a: 8.8 [5.7-12.0]