Abstract
anadians think of contraband tobacco and cigarettes as a nuisance at best, or a tax-revenue
problem at worst, not in terms of organized crime or terrorism.
This authoritative study of the size, scope, and operations of contraband tobacco and cigarettes in Canada reveals this to be a false dichotomy. Canadian law enforcement seizures of contraband tobacco routinely include high-powered weapons, hard and designer drugs, stolen vehicles and other merchandise, and lots of cash. Indeed the week this report was released, police in Quebec carried out 70 raids and made 60 arrests against an international criminal network involved in drug and contraband tobacco trafficking, and money laundering, in the largest anti-contraband operation to date.
Contraband tobacco is lucrative, it is produced and trafficked systematically alongside other illicit goods, and Canadian crime syndicates are heavily invested in its proceeds. Globally, money from contraband tobacco and cigarettes is a major source of revenue for the likes of ISIS, al-Qaeda, and Hezbollah, whose contraband fundraising activities in North America have been subject to indictments.
Producers and traffickers of contraband prey on the most vulnerable population groups in Canadian society. They brazenly flaunt restrictions on procurement, manufacturing, packaging, promotion, and sale of tobacco and cigarettes. Their ranks count hardened Mafioso and notorious criminal bikers who exploit Native communities. Tobacco farmers divert crops to the illicit market; some cooperate to reap higher profits, some uncooperative ones are coerced or have their tobacco stolen.
Compared to illicit drugs, materials and manufacture are readily accessible, and the market for contraband tobacco and cigarettes is huge, highly profitable and easy to reach. The loss factor is minimal because chances of detection are small, penalties lenient (if any are imposed at all), and social stigma less than for alternative illicit activities. Canada’s contraband market in tobacco and cigarettes has been estimated at more than $1.3 billion, which rivals the narcotics market and is likely an underestimate. In Ontario alone, roughly $500 million in excise taxes are lost annually, and total forgone tax revenue has been estimated at over $1 billion. Nationally the figure is as high as $3 billion.
Enforcement is hampered by entangled juris-dictional issues, collective action problems within and across jurisdictions, scarce enforcement resources, legislative gaps, and, it seems, lack of a comprehensive plan, let alone strategy. There has been some institutional learning, and worthwhile innovations at different jurisdictional levels – federal, provincial, and First Nations. This study explores and compares some of these innovations to forge a comprehensive approach to contraband tobacco and cigarettes.
problem at worst, not in terms of organized crime or terrorism.
This authoritative study of the size, scope, and operations of contraband tobacco and cigarettes in Canada reveals this to be a false dichotomy. Canadian law enforcement seizures of contraband tobacco routinely include high-powered weapons, hard and designer drugs, stolen vehicles and other merchandise, and lots of cash. Indeed the week this report was released, police in Quebec carried out 70 raids and made 60 arrests against an international criminal network involved in drug and contraband tobacco trafficking, and money laundering, in the largest anti-contraband operation to date.
Contraband tobacco is lucrative, it is produced and trafficked systematically alongside other illicit goods, and Canadian crime syndicates are heavily invested in its proceeds. Globally, money from contraband tobacco and cigarettes is a major source of revenue for the likes of ISIS, al-Qaeda, and Hezbollah, whose contraband fundraising activities in North America have been subject to indictments.
Producers and traffickers of contraband prey on the most vulnerable population groups in Canadian society. They brazenly flaunt restrictions on procurement, manufacturing, packaging, promotion, and sale of tobacco and cigarettes. Their ranks count hardened Mafioso and notorious criminal bikers who exploit Native communities. Tobacco farmers divert crops to the illicit market; some cooperate to reap higher profits, some uncooperative ones are coerced or have their tobacco stolen.
Compared to illicit drugs, materials and manufacture are readily accessible, and the market for contraband tobacco and cigarettes is huge, highly profitable and easy to reach. The loss factor is minimal because chances of detection are small, penalties lenient (if any are imposed at all), and social stigma less than for alternative illicit activities. Canada’s contraband market in tobacco and cigarettes has been estimated at more than $1.3 billion, which rivals the narcotics market and is likely an underestimate. In Ontario alone, roughly $500 million in excise taxes are lost annually, and total forgone tax revenue has been estimated at over $1 billion. Nationally the figure is as high as $3 billion.
Enforcement is hampered by entangled juris-dictional issues, collective action problems within and across jurisdictions, scarce enforcement resources, legislative gaps, and, it seems, lack of a comprehensive plan, let alone strategy. There has been some institutional learning, and worthwhile innovations at different jurisdictional levels – federal, provincial, and First Nations. This study explores and compares some of these innovations to forge a comprehensive approach to contraband tobacco and cigarettes.
| Original language | English |
|---|---|
| Place of Publication | Ontario, Canada |
| Publisher | Macdonald-Laurier Institute |
| Number of pages | 65 |
| Publication status | Published - 2016 |
| Externally published | Yes |
