Canada Eyes Big Hike in Tobacco Taxes
OTTAWA (Reuters) - Canadian Finance Minister Paul Martin has asked the country's provinces to consider joining him in imposing aggressive tax increases on tobacco, spokesman Scott Reid said on Thursday.
Martin wrote to provincial finance ministers in late January speaking of the need to reimpose tobacco taxes that were cut in 1994 to counter smuggling from the United States.
``Essentially...the minister wrote to the provinces and said, 'Obviously our objective is to get back to pre-1994 levels as soon as possible. Let's really try to take the initiative on this','' Reid said.
Federal and provincial taxes were cut by between C$14 ($9.40) and C$21 on a carton of 200 cigarettes in 1994 in five eastern provinces, including Ontario and Quebec. In those provinces they have since risen gradually by C$3.40 to $5.80. Taxes were cut by C$5 in the other five provinces in 1994.
Finance officials from the federal and provincial governments will meet early next month to examine how far the taxes can be raised without reigniting smuggling.
Tobacco taxes were raised sharply in 1989 and 1991 in an effort to discourage smoking, but the hikes kicked off massive, organized cigarette-smuggling operations.