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Ottawa, November 1, 2001
2001-095

Tobacco Tax Increases to Discourage Smoking

Related Documents:

• Backgrounder.
• Notice of Ways and Means Motion to amend the Customs Tariff and the Excise Tax Act to implement certain measures relating to tobacco products.

Finance Minister Paul Martin and Health Minister Allan Rock today announced an increase in federal taxes on tobacco products, to take effect on November 2, 2001, as part of the Government’s comprehensive strategy to improve the health of Canadians by discouraging tobacco consumption.

This increase will be co-ordinated with provincial tobacco tax increases.

"The measures we are announcing today reflect the Government’s ongoing commitment to increase tobacco taxes in support of better health for Canadians," said Minister Martin. "I am pleased that provincial governments share this objective and that we have been able to work together so effectively on this initiative."

Minister Rock said, "Today’s announcement is one more important step in the strategy the Government launched last April to discourage smoking – particularly among young Canadians."

In April 2001 the federal government increased tobacco taxes and put in place a new tobacco tax structure, which included a revised export tax designed to reduce the incentive to smuggle.

Today’s tax increases re-establish a uniform federal tax rate for cigarettes across all provinces and territories. The federal tax increases amount to $2.00 per carton of cigarettes for sale in Quebec, $1.60 in Ontario and $1.50 in the rest of Canada.

Concurrently, the provincial governments of Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island are increasing their tobacco product taxes. On cigarettes, these provincial increases are $2.50 per carton in Quebec, New Brunswick, and Nova Scotia, $2.00 per carton in Prince Edward Island and $1.60 per carton in Ontario.

Today’s announcement also includes a $1.50 federal tax increase on cartons of tobacco sticks and 200-gram quantities of fine-cut tobacco for sale in all provinces and territories.

Taxes on exported tobacco products, and on tobacco products delivered to duty-free shops, sold as ships’ stores or imported by Canadian residents returning to Canada, will also be increased.

Law enforcement agencies will continue to monitor and assess the effectiveness of the new tobacco tax structure in controlling contraband.

A backgrounder providing further details about these measures is attached.

Secretary of State (International Financial Institutions) Jim Peterson today tabled a Notice of Ways and Means Motion to implement these tax changes.

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