Tobacco Documents Online

tTA11ON WABC-TV 4 THE ABC TV N81WORK Am" ABC WORLD NEWS TONIGH'T NEW YOR1C 05/03/93 6144 P.M. µDIp4p CANADIAI3 CIGARETTES ~4;.y%q::~, PETER JEDadZNaS (]1NC8OR) : For the last two weeks now, we've devoted some time every night to answering a question about health care reform, which is all about medicine and money, and we're going to continue this week. In the latest ABC News/Washington Post poll which was published today, we find that nearly two-thirds of those we asked believe that a $2.00 a pack increase in the tax on cigars, the so-called sin tax to help provide care tor everyone, is a good idea. well, they've had such a tax in Canada for some time. ABC's John McKenzie has been.there to see how it's working. JOFai tdCMZIE (REPORTEit) : A van pulls away fram the Q. S. border heading for Toronto. Two Canadian police cars are in pursuit. The police were tipped off about this shipment. Now they move in. W1N (CA21J4DIADT POLICE OFFICER) : You' re being placed under arrest for possession of cigarettes. MCI=IE: Smuggled cigarettes, 21 cases worth $40,000. sCT. AL GOODALL (RAY71L CANADIJIlt !lOMITED POLICE) : The problem is growing faster thaa we can control and even if it stayed at the level it's at today, it is much beyond an enforcement problem. MCICENZIE: It's estimated that one in every five cigarettes smoked in Can.ada is a Canadian cigarette that's been smuggled back into the country, costi'ng the government more than a billion dollars a year in lost tax revenue. Here's what happens: cigarettes made in Canada that are exported are not taxed. so Caaadians cross the border to buy them in the United States for $13.00 a carton. They then smuggle them back into Canada, where they resell the untaxed cigarettes on the black market for the equivalent of $26.00, still well below the legal retail price of $40.00 a carton. Who's selling it? JACOBE9 eEAIILIEII (ROYAL CA2MIAN MOUNTFD POLICB) : Bualneaemea, organized crime. )ma+an drug dealers, housevives, pensioners. government employees. llC.iMAZIE: The cigarettes are smuggled by snowmobile, hidden in the holds of boats. tucked away in shipments of lumber. Few people are ever caught and those who are are usually fined only a few thousand dollars. And the profits? SCr. CAEti. COPP (ROYAL CAK71DI11K ?lOUN'1'ED POLICE) : A small time operator can make himself a couple of thousand dollars a week, dependiag on how busy he wants to be. A big time operator -- I'm talking about the organized people -- they can do $10,000-$20,000- $50,000 in the run of a week. MClCFNZIE: The higher taxes have made cigarettes more valuable not only to smugglers, but to robbers. In Ottosra, the nstion's capital, there are about 20 break-ins a month with tobacco the target. Rare, three men head right for the cigarettes. They don't even bother to open the cash register. While the higher taxes have created a higher crime rate, the government says the benetits far outweigh the costs. (Coard.) 0 comp #"-

(CoWy OTTA J8LLNEX (REVENUE MIDTISTBR): The whole reason for us raising taxes on tobacco products was not to increase our revenue but to reduce the use of tobacco by Canadians because of health reasons.and costs. MCKENZIE: And it's working. Cigarette conauaption has been falling et faster in Canada than in the United States and Canada collects more in taxes than it ever loses in smuggling. 9t111, the smuggling problem has forced the government to raise the number of police patrols along the border and to toughen penalties for those who are caught. The goal now, getting more smuggling tobacco into police shredders and out of tYu huids of Canadian smokers. John McS.enzie, A8C News, Toronto. ~r;>~