What Effect Does Tobacco Taxation Have on Contraband? Debunking the Taxation – Contraband Tobacco Myth

Research demonstrates that many factors are associated with contraband tobacco use, including: easy access, misconceptions about “legal” purchase of cigarettes from First Nations’ Reserves, insufficient enforcement and penalties, and organized criminal activity. It is frequently claimed that tobacco taxes cause smuggling. This report disputes the link between tobacco taxation and contraband using evidence from the literature, Ontario trend data on tobacco taxes, consumption, prevalence and contraband, and tax and price data in Canada, and critically reviews an earlier Fraser Institute Report.