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Ottawa, February 17, 1995
1995-016

Action Plan Success Permits Tobacco Tax Increase

Finance Minister Paul Martin took action today to permit an increase in federal excise taxes on tobacco products, effective February 18, 1995.

In a Ways and Means Motion tabled in the House of Commons, the government proposed amendments to the Excise Tax Act to increase by $0.60 per carton of 200 the federal excise taxes imposed on cigarettes intended for retail sale in Quebec and Ontario.

"In announcing the National Action Plan on Smuggling, the Prime Minister indicated that tobacco tax reductions would be reversed as the smuggling networks were shut down", Mr. Martin said. "The tobacco tax increases we propose today are a direct result of our success to date towards that end."

The Minister said the changes are a first step towards the long-term restoration of uniform federal excise tax rates for tobacco products across Canada. However, he noted that while the government is pleased with the impact of the Action Plan, caution is required in order not to recreate the conditions that originally gave rise to the smuggling problem.

The proposed changes will generate an additional $65 million in federal revenues on a fiscal year basis.

Quebec and Ontario, provinces where the federal-provincial tax reductions were deepest, are also announcing identical increases in their respective tobacco taxes. This co-ordinated action reinforces the importance of joint federal-provincial efforts to deal effectively with contraband activity and is consistent with the matching tax reductions undertaken under the Action Plan.

Minister of Health Diane Marleau said "I am very pleased that Mr. Martin has taken this step. The fight against tobacco use is, however, not over. Health Canada will continue its efforts to encourage Canadians, especially young people, not to smoke."

The government will continue with enforcement efforts announced under the Action Plan and will monitor, with all provincial governments, the effectiveness of the anti-smuggling initiative.

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For further information:

Geoff Trueman
(613) 992-4384