The latest increase in tobacco taxes puts B.C. cigarette prices among the highest in Canada, prompting concern about an increase in smuggled smokes.
The B.C. government budget adds 56 cents in tax to the price of a pack of 20 cigarettes, effective April 1. That brings the total provincial tax to $5.50 per pack, with federal excise tax and provincial sales tax on top of that.
It’s the second increase this year. B.C.’s tobacco tax went up 16 cents per pack on Jan. 1, and one of Canada’s largest tobacco companies warns the effect may not be what the provincial government expects.
A 50-cent tax increase in Alberta last year led to a drop in tobacco tax revenue, said Eric Gagnon, head of corporate and regulatory affairs for Imperial Tobacco Canada.
“Excessive taxation is the primary factor that drives consumers to the illegal market,” Gagnon said. “The federal government recognizes this when it comes to marijuana, with federal Finance Minister Bill Morneau suggesting that taxes should be kept low to allow competition with the illicit market.”
B.C. continues to allow tax-exempt tobacco sales to aboriginal people on reserves, and in duty free shops for international travellers. Diplomatic and consular staff are also eligible for tax-free tobacco purchases.