Contraband Cigarettes in Ontario

This report documents the scope of the contraband cigarette market in Ontario and quantifies the extent of use and the financial impact on tax revenues of one source of contraband tobacco products – cigarettes purchased on First Nations reserves. The report also describes the characteristics of smokers who most frequently purchase untaxed or partially taxed cigarettes on reserves. Key findings are based on data for adult smokers surveyed from July 2005 to June 2006. At least 14% of cigarettes are bought on reserves; this is a conservative estimate of the use of contraband tobacco products, as it does not include contraband cigarettes sold off reserve. To maximize the effectiveness of tobacco tax policy and protect tax revenues, the authors suggest that the Ontario and federal governments will have to work collaboratively, and with First Nations communities, to develop solutions and implement measures to prevent contraband.