Sault Blog

Recently, I noticed a series of social media and video-streamer advertisements for cigarettes that could be purchased online and delivered tax-free to the customer’s front door. Again, the main selling point is being tax-free, and with the minimum purchase of $99, the delivery would also be free; ironically, using the tax-funded Xpresspost Canada.

Again, because low cost is the priority, these “Canadian” branded cigarettes are priced at an amazingly low $45 for a ten-pack carton. “TAX-FREE IN ALL PROVINCES. Strategically Shipped From Tax Exempt Land To Provide You With A Tax Free Purchase” is the direct online sales quote.

I have also noticed that First Nations Reserve Bands across Ontario have re-branded themselves as “duty or tax-free zones” with highway billboard advertisements. The First Nations Reserves adjacent to Sault Ste. Marie, proliferated with shops vending cigarettes, vapes, and cannabis products, with such numbers that clearly they do not just service their constituent group, but also cater to the residents of Sault Ste. Marie and Algoma region.

I understand that there are a multitude of treaties that provide tax exemption for legitimate First Nations Citizens on First Nations Reserves to conduct tax-free business for themselves, but these “tax-free” businesses were not intended for the marketing and sale of goods, especially as harmful as cigarettes, to non-First Nations Citizens, and conveniently deliver them off the Reserve.

Cigarettes, vapes, cannabis, and other carcinogenic products need to be taxed by every vendor because those funds are required by an Ontario healthcare system that is underfunded. I also have a problem with the sale of cigarettes by on-reserve vendors to off-reserve customers, and I question why this is allowed.

Smoking cigarettes is extremely harmful, in Ontario, where it is the leading cause of preventable diseases and premature death. It is linked to numerous cancers, respiratory and cardiovascular diseases, and contributes to the deaths of approximately 16,000 Ontarians every year.

People who smoke are more likely to be hospitalized and stay in the hospital longer. The medical cost of smoking in Ontario is nearly $7.0 billion per year in direct and indirect economic costs. This figure is part of the total economic burden of smoking in Canada, and it contributes to the higher rates of preventable deaths from heart disease, respiratory disease, and cancer in the province, according to the Public Health Ontario.

While the medical costs associated with smoking cigarettes have risen, Ontario is experiencing a loss of cigarette tax revenue due to two primary factors: a decline in legal cigarette consumption and the growth of the contraband tobacco market.

Legal cigarette sales in Ontario have fallen by over 20% since 2019. The Ontario government’s 2023 budget projected a drop in revenue from $1.1 billion in 2020-21 to $840 million, a decline attributed to lower smoking rates and increased use of vaping products. The illegal sale of untaxed cigarettes is a major contributor to the loss, costing the province an estimated $990 million to $1.8 billion in lost tax revenue between 2019 and 2022. The price difference is the primary driver; contraband cigarettes can be purchased for as little as 40% of the price of legal, tax-paid products, as taxes amount to about 70% of the legal retail price.

The contraband cigarette market makes up a large portion of the overall tobacco sales in Ontario, with some estimating it could comprise up to 67% of the total market. These products are sold illegally, without health regulations or inspection, and entirely tax-free.

Along with the lost tax revenue, the Ontario Government spends a tremendous amount of money on cancer patient care; total government cancer medical expenditure in Ontario reached CA$1.7 billion in the 2021-22 fiscal year. A recent study indicates that cancer medicines accounted for almost half of total government spending on cancer care in Ontario.

Cancer is fought using biological and other cancer drugs. In Canada, these are very expensive, with medium monthly cancer patient costs for substantial benefit drugs averaging around $6,207 and some reaching over $34,000. These high costs create a significant financial burden for individuals, even with public drug coverage, and are a major driver of overall cancer-related spending in Canada.

It seems irresponsible that a product known to cause cancer would be sold tax-free when the effects of that product force the government to spend so much money on trying to save the tax-free cigarette smoker.

Cancer is an indiscriminate killer; it doesn’t care about treaties, it doesn’t care what nation you belong to, and the only thing that cures cancer is money. Paying taxes on all cigarette products sold anywhere, delivered to anybody, must be collected and enforced because tax dollars go to fund research for cancer cures, biological drugs, medicines, medical procedures, medical professionals, clinics, out-patient resources, and other extremely important cancer patient supports.

Mark Menean, http://www.saultblog.com
Thank you: Public Health Ontario, news.ontario.ca, Canadian Cancer Society.