Tobacco prices jumped across the country last night as Ottawa and several provinces moved to levy tax increases from a low of $1.50 a carton of cigarettes in the Western provinces to $4.50 a carton in Quebec.
The federal increase also raises taxes for 200-gram quantities of fine-cut tobacco.
The federal increases, announced by Health Minister Allan Rock, are the second since April, when Ottawa reversed its policy in place since 1994 of keeping taxes down in an effort to fight smuggling.
The federal component of the hikes is $1.50 a carton in most jurisdictions, save Ontario and Quebec, where the federal portion is $1.60 and $2, respectively. The provincial treasuries of Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island also increased their taxes, from $1.60 in Ontario to $2.50 in Quebec. The Quebec increase is included its budget, released yesterday.
The figures bring the federal taxes on cigarettes to a uniform rate of $12.35 a carton. The increases took effect at midnight.
Mr. Rock noted that the smoking rate among Canadians 15 to 24 spiked in 1994, when taxes were reduced to battle the smuggling of cheaper cigarettes from the United States. The tax hikes will help bring those rates down, he said.
"We're gradually edging back toward the '94 [tax]levels," Mr. Rock said. "With that will come the health benefits of fewer young people smoking."
Residents of the Northwest Territories pay the most for a carton of smokes, $58.91; Ontario residents pay the least, $42.26. The Western provinces did not hike their taxes, given that cigarettes in those jurisdictions cost more than in other provinces.
A spokesman for the Canadian Cancer Society congratulated the federal government but said it must continue to raise taxes if it wants to discourage young Canadians and others from smoking.
"Even with these increases, Ontario and Quebec will still have the lowest cigarette prices in North America," Rob Cunningham said. "Is there room for further increases? Yes."
A spokesman for one of Canada's large tobacco manufacturers said the federal government must watch carefully that it doesn't encourage more smuggling by increasing taxes too much.
John McDonald of Rothmans, Benson & Hedges, said smokers are among the highest taxpayers in the country, and Ottawa takes in eight to 10 times more in revenue from cigarettes than do the country's three tobacco manufacturers combined.
The government will take in $246-million more over one year in cigarette taxes.
Mr. Rock said he doesn't believe smuggling has increased, and pointed to an increase in federal export taxes last April as the reason. Before 1994, Canadian cigarettes going to the United States were exported tax-free. Some were smuggled back and sold at discounts.
Also yesterday, Mr. McDonald criticized the report of special panels that backed Mr. Rock's move to ban the words "light" and "mild" from cigarette packages.
Mr. McDonald said the panels were stacked with individuals who are well-known antismoking activists. Moreover, he said, the tobacco companies were simply co-operating with the federal government when they introduced light and mild brands, so to castigate them is wrong.
Mr. Rock said yesterday that he plans to outline soon the government's plans to enforce the ban.