Canada, provinces jack up tobacco taxes
OTTAWA, June 17 (Reuters) - In a bid to fight tobacco consumption, Canada hiked federal cigarette taxes on Monday by C$3.50 ($2.26) a carton, and some provinces added higher levies of their own, restoring the tax level to what it was in the early 1990s be
The move was expected to boost federal revenues by C$370 million a year.
Canada's two most populous provinces, Quebec and Ontario, announced tax hikes of C$5 a carton, and New Brunswick raised its levy. Earlier this year Alberta hiked its tax by C$18 a carton and British Columbia by C$8 a carton.
The increases are effective as of midnight on Monday, lifting the price of a carton of 200 cigarettes in Ontario, for example, to about C$50.
"With today's increases, the government is restoring federal tobacco tax rates to the levels that existed prior to 1994," Deputy Prime Minister John Manley said in a release.
Ottawa and several provinces were forced to roll back major increases in tobacco taxes in 1994 after a surge in cigarette smuggling from the United States.
Other measures announced on Monday by Ottawa and the provinces included increased taxes on cigars and other tobacco products. Taxes on exported tobacco products, and tobacco products delivered to duty-free shops, sold as ships' stores or imported by tourists returning to Canada, will also be hiked.
With the latest rise, total federal excise taxes on cigarettes will now be C$15.85 a carton.
Canada's leading cigarette makers are British American Tobacco's (London:BATS.L - News) Imperial Tobacco Canada Ltd.; Rothmans Benson & Hedges Inc., a unit of Philip Morris International Inc. (NYSE:MO - News) and Rothmans Inc. (Toronto:ROC.TO - News); and JTI-Macdonald Corp., owned by Japan Tobacco Inc. (Tokyo:2914.T - News).
Several years ago Ottawa tried to sue tobacco firms in a U.S. court, alleging the major producers participated in smuggling in the 1990s by selling large numbers of cigarettes to the United States, knowing they were destined to be brought back to Canada illegally.
The companies denied the allegation, and the case was dismissed on a legal technicality.