For immediate release:
Apr 30, 2008

McGuinty Liberals questioned why they allow illegal smoke shacks in Ontario

Queen’s Park – Local MPP Toby Barrett called on the Ontario government to do their part in cracking down on illegal smoke shacks and tobacco that is fuelling criminal activities across the province.

Barrett had an opportunity to respond to his Party’s motion concerning illegal smoke shacks in the Ontario Legislature today. (The motion is inserted following the release)

“There is an unintended partnership of government policy and the underground economy that has put Canadian tobacco farmers and the legal tobacco trade at a competitive disadvantage,” Barrett told the Legislature. “The situation reminds me of Samuel Johnson’s quote: the road to hell is paved with good intentions, and nowhere is this more prevalent than in my own riding of Haldimand-Norfolk.”

Barrett then went on to talk about Doug Fleming of Caledonia who attended the Queen’s Park media studio last December to talk about smoke shacks in his hometown. Mr. Fleming had grown tired of watching minors carry bags of cigarettes to and from town on the handlebars of their bicycles and set out to put an end to it. Eventually, in attempt to draw attention to the matter, Mr. Fleming set up his own smoke shack in town, and when he suggested to the OPP that he was breaking the law and should be arrested, the OPP refused.

While in the media studio Mr. Fleming said: “I had turned to a life of crime in an attempt to have the law enforced, but it wasn’t working.” In conclusion, Mr. Fleming had said, “If Premier McGuinty wants to create a smoke-free Ontario, it seems to me that he’s not doing a very good job.”

As he has in the past, MPP Barrett said that the government can put an end to illegal tobacco and smoke shacks by increasing enforcement and reducing tobacco taxes.

“I used to work for the Addiction Research Foundation, and there were many, many smoke shops locally in the mid-1990s,” Barrett said. “Taxes were reduced in both Ontario and Quebec, and overnight in Six Nations alone, 300 smoke shops disappeared.”

Despite tobacco tax revenue being at an all-time high, sales of counterfeit, contraband and illicit products mean that the federal and provincial governments are losing $1.6 billion in additional taxes each year.

Other members of the PC caucus took aim at the government, suggesting that they are not acting or protecting the health and well-being of all Ontarians by allowing illegal smoke shacks to operate.

Aboriginal Affairs Minister Michael Bryant told the Ontario Legislature that he did not understand why one smoke shack was receiving so much attention in the Ontario Legislature.

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Official Opposition Motion
Mr. Robert W. Runciman:
I move, Whereas one of the goals of the
Ontario smoke-free strategy is “to prevent smoking among Ontario's children, youth and young adults”; and

Whereas, according to the Ministry of Health Promotion’s website, each year 90,000 kids in Ontario try smoking; and

Whereas an illegal smoke shop is operating on provincial land on Argyle Street in downtown Caledonia; and

Whereas the said smoke shop is located within metres of Notre Dame elementary school and within a kilometre of a local high school; and

Whereas residents in Caledonia report seeing children riding bicycles with cartons of cigarettes on their handlebars; and

Whereas illegal smoke shops are selling untested cigarettes without warnings to children and without asking for identification; and

Whereas the McGuinty Liberal government refuses to shut down illegal smoke shops in Ontario, particularly the one on Argyle Street in Caledonia;

The Legislative Assembly of Ontario calls upon the McGuinty government to move immediately to shut down all illegal smoke shops in Ontario and prosecute vendors of illegal cigarettes to the fullest extent of the law.

Addressed to the Premier.

April 29, 2008
Mr. Toby Barrett: I regret this issue of illegal tobacco has to be brought before the House. There is an unintended partnership of this government's policy and the underground economy, and it's certainly put Canadian tobacco farmers and anybody else involved in the legal tobacco trade at a competitive disadvantage. Why is that? Because, in part, this government has jacked up taxes considerably since its inception. It reminds me of a quote from Samuel Johnson: "The road to hell is paved with good intentions."

This particular government policy is not working, and that's nowhere more evident than in my riding and the counties of Oxford, Elgin, Brant and Middlesex.

I will say off the top that, in contrast to what we just heard, we as a society could help resolve this crisis and help make our communities a little safer through enforcement and as well by reducing tobacco taxes. I used to work for the Addiction Research Foundation, and there were many, many smoke shops locally in the mid-1990s. Taxes were reduced in both Ontario and Quebec, and overnight in Six Nations alone, 300 smoke shops disappeared. So there are ways of dealing with this.

Despite tobacco tax revenue being at an all-time high, the sales of not only counterfeit but also contraband-the illicit products and brands sold by native people-mean that federal and provincial governments are losing something in the order of $1.6 billion in additional taxes. The Premier here attributes the $73.4-million drop in tax revenues to Smoke-Free Ontario. Those of us with any inkling of economics know full well that that money has gone to the tax-free black market. Why any government would support the underground economy I don't know. If this government did lower taxes, we would see those 300 shacks disappear in Six Nations. As I said, it happened in the 1990s.

When I worked on a tobacco farm, there were well over 3,000 farmers. We're now down to barely 600 farmers. Again, legal farming, legal manufacturing, people who play by the rules, the legal corner stores are suffering. They cannot compete with this illegal trade. Furthermore, cheap smokes obviously undermine the sin tax strategy, the policies of this government. We've heard the figures. I know a year ago the illicit trade accounted for something like 25% to 30% of sales. Back in 2006, it was only about 16.5%. Now we hear figures of 38% illegal trade, more than doubling in a number of years.

More illegal cigarettes are smoked in Ontario than any other province across Canada. A study that was conducted last year by GFK Research Dynamics found that one out of three cigarettes smoked in Ontario between May and June of 2007 was contraband. Half of Canada's total illegal sales come out of Ontario. It's unacceptable. Everyone is affected, and the funds used to buy these cigarettes are certainly impacting the local communities through higher crime. It feeds crime-not only illegal tobacco, but the gun trade and the drug trade. So it is time for this government to partner with the federal government, undermine these gangs, remove the demand and place this province once again in a position to enforce laws, to enforce government policy and take a swing at this illegal trade.

The corner store operators will tell you that higher taxes and the increased illegal sales really put them in a position to try and scramble to make some money. Cigarettes may not turn a high profit, but they do bring in other trade to buy newspapers, pop, for example, and groceries. Higher taxes help fund the illegal trade, and as a result are forcing the legal people out.

Last December, one of my constituents who lives in Caledonia, named Doug Fleming, held a news conference here in the media studio. I will just quote Mr. Fleming. "I'm here to protest illegal smoke shops. I refer to them as illegal because they operate on deeded land that is part of Haldimand county." He talked about the first smoke shop that was opened down there-this would be a year ago the coming June-the second four months later and another one in November. All three smoke shacks are being operated by residents of Six Nations. Mr Fleming reported that on the way out of town one day he noticed a young fellow, about 14 years old, riding his bicycle. He had a bag-i t would be probably 200 cigarettes-on his handlebars. He reported this to the police. They really didn't seem to be interested. So he did a bit of a search, he looked through the land registry office for the land title and discovered the land on which the smoke shack sat was not reserve land, but rather deeded land and therefore legally subject to Haldimand county bylaws. He went to the county to inquire which permits had been issued. None had been issued.

So what did Mr Fleming do? He opened his own smoke shop. He called it Doug's Smokes. He put it on a vacant lot in Caledonia, and he was careful not to break any laws that weren't already being broken by native people. As he says, " That way, if the OPP arrested me, they would have to arrest them too. My aim, however, was not to make money. It was to get the attention of the OPP." He suggested to the police he was breaking the law and perhaps they should arrest him. They refused. As Mr. Fleming says, "I had to turn to a life of crime in an attempt to have the law enforced, but it isn't working."