ENEWS:CANADA:Cigarettes - and Tories - get a break

[Robert Weissman <rob@essential.org>]

Cigarettes - and Tories - get a break

by Ian Urquhart
Toronto Star (1575) 
CANADA;
Date: Thursday, 1/28/99
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ONTARIO'S TORIES may have been granted an inadvertent favour by Quebec's
government in a behind-closed-doors meeting in Ottawa last week.

 The meeting, of federal and provincial finance officials, quietly agreed
to shelve a plan to raise tobacco taxes.




 Ever since tobacco taxes were slashed in eastern Canada in 1994 to
undercut U.S.-based smugglers, there has been a sort of ``gentleman's
agreement'' between Ottawa and the five eastern provinces that any future
increase would be done in concert. 

 That is, they must all agree to raise tobacco taxes by the same amount
or, if one of them disagrees, none of them moves. Otherwise - if, say,
taxes were lower in Quebec than in the other provinces - there would be a
risk of interprovincial smuggling. 

 Earlier this month, with a growing gap in tobacco prices between Canada
and the U.S., it seemed there was a consensus among the six governments
that taxes would rise by $1.50 a carton of 200 cigarettes - with the
proceeds to be split evenly between Ottawa and the provinces. Then, at
last week's meeting, that consensus fell apart.

 My sources say Quebec - which was particularly hard-hit by smuggling from
northern New York - got cold feet. 

Ontario, I am told, played a relatively passive role. 

 The decision will outrage anti-tobacco groups, which have been pushing
for a substantial hike in tobacco taxes. They see higher cigarette prices
as a powerful deterrent to young people smoking.

 But it gets Ontario's Tories off the horns of dilemma. 

 If they were to go along with a tobacco tax hike, it would tarnish Mike
Harris' image as a ``tax fighter'' and clash with the Tory's re-election
platform, which is expected to emphasize lower taxes. 

While fewer than three in 10 Ontarians smoke, they can be an extremely
vocal minority. 

 If, on the other hand, the Tories were seen to be blocking a tax hike,
they would incur the wrath of anti-tobacco groups and their allies, the
doctors. That's a fight the government doesn't need right now.

 So now the Tories can refrain from raising taxes and blame it on Quebec. 

Ian Urquhart is The Star's provincial affairs columnist.		
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11:13 AM on 1/28/99