PHOTOS: The benefits to young people of a low-tax regime for cigarettes. Real portrayals of the joys of smoking may not appear exactly as illustrated. Below: Cigarette smuggling – bad for the books for sure; Wildrose Party Finance Critic Derek Fildebrandt, whose 2012 Canadian Taxpayers Federation publication argued contraband cigarettes are a problem that could be fixed by lowering taxes on legal smokes.
It should come as no surprise Imperial Tobacco wants to lobby the Alberta government about so-called contraband tobacco, even though pirate smokes are not a particular problem in this province.
That’s because the Big Tobacco’s effort to publicize contraband tobacco – associated in the public mind with First Nations reserves adjacent to the U.S. border in Ontario and Quebec – is arguably another front in the industry’s long and dogged rear-guard action against the implementation of regulations and taxes designed to discourage demand for tobacco and reduce the health-care costs associated with its use.
So why would a lobbyist for Imperial Tobacco Canada Ltd. of Montreal name an opposition MLA as their principal contact on the file, and pick the issue of contraband tobacco to discuss with him?
That’s just what a Toronto-based lobbying firm called Temple Scott Associates has done, naming senior consultant Robert Elliott in an Aug. 4 filing with Alberta’s Lobbyist Registry as the person who will meet with Derek Fildebrandt, the Wildrose Party’s finance critic, “to discuss Canada’s illegal tobacco crisis and its spread to Alberta” between the start of August and the end of this year.
Note that the same company registered in 2010 on behalf of the same client to lobby senior officials of a number of departments as well as Progressive Conservative MLA Rick Fraser, one of the few PCs to survive the NDP’s May 5 election victory. While still technically active, that filing, which names a different Temple Scott lobbyist, has not been amended since the election.
Mr. Elliott and Mr. Fildebrandt certainly seem to have some things in common.
Mr. Elliott’s company biography says he is a former staffer in the Prime Minister’s Office as well as a Conservative Party activist in Ontario and at university.
Before successfully launching his political career this year, Mr. Fildebrandt is reported to have spent time working on the Hill and was well known as spokesperson for the Canadian Taxpayers Federation. He too joined conservative groups at university.
Mr. Fildebrandt’s former employer, the CTF, describes itself as a tax watchdog. In reality, though, it is part of the extensive network of Astro-Turf organizations, think tanks and corporate-financed advocacy groups that support the goals and election of conservative governments throughout Canada, act as a recruiting ground for conservative candidates, and lobby for policies supported by the corporate sector.
As a CTF employee, Mr. Fildebrandt was certainly familiar with Big Tobacco’s thoughts on contraband smokes, having prepared a CTF paper in 2012 that echoed many of the lobby’s positions on the issue. In it, Mr. Fildebrandt got to the heart of what the industry would like us all to see as the problem with contraband tobacco: high taxes on legal tobacco.
“You cannot ignore tax rates if you are serious about attempting to reduce the amount of contraband tobacco,” Mr. Fildebrandt wrote in the paper, conceding then that the problem was restricted to Quebec and Ontario.
The solution from the CTF’s perspective was to lower taxes on legal tobacco. Moreover, Mr. Fildebrandt added in the paper, “any adjustment to tobacco tax rates should occur at the provincial, rather than the federal level.” He dismissed enforcement efforts as being impeded by political correctness, opining, “bringing this underground industry to heel will require that politically correct sensitivities imposed on the police be done away with.”
In actuality, of course, the role of cross-border First Nations reserves, presumably the justification for Mr. Fildebrandt’s remarks about political correctness, is only part of the story.
In 2010, for example, several large tobacco corporations agreed to pay $1.7 billion dollars to the Canadian government to settle criminal and tax dodging claims for a massive smuggling operation in the 1990s. At the time, 20 per cent of the cigarettes in Canada were smuggled, costing the government hundreds of millions of dollars in lost tax revenues. Some of the companies never admitted guilt, but paid up nevertheless. Imperial Tobacco pleaded guilty to customs charges in 2008 and agreed to pay as much as $1.5 billion in fines and civil payments in connection with its role in aiding sales of contraband tobacco.
Past attacks by the CTF on tobacco taxes also raise the perennial question of whether the organization itself receives financing from the tobacco industry, as have other advocacy organizations and right-wing think tanks. But while it demands transparency by public agencies, the CTF refuses to divulge information about its own finances.
“We don’t discuss the identities of our donors,” CTF Communications VP Scott Hennig reiterated to me, directing me to the CTF’s policy statement on the topic.
“Our only proviso is that we do not accept donations given through coercion (tax dollars, unions dues),” Mr. Hennig added, a proposition that suggests the anti-union activism of some of the organization’s directors may now have become official CTF policy, extending beyond criticism the pay and benefits of unionized public sector workers.
Regardless, Imperial Tobacco’s current efforts are most likely spurred by the knowledge many health groups are now pressing Alberta’s NDP Government to increase tobacco taxes in next month’s 2015 budget to make tobacco products less affordable to vulnerable young people.
The possibility a portion of the province’s minimum-wage increase could flow through to the tobacco companies’ bottom lines is a concern spurring calls for ways to make tobacco less affordable. And the most effective way to keep more young people from being tempted by tobacco is to drop the previous Conservative government’s low tobacco-tax policy, which makes Alberta cigarettes the most affordable in Canada.
When Alberta’s general low-tax policies, which are being continued by the NDP, are applied to tobacco, “the result is devastating,” Action on Smoking and Health argued in a 2014 blog. “Any ‘advantage’ that is to be derived from low tobacco taxes is completely undermined by higher smoking rates, increased illness and premature death, reduced productivity and greater demands on health care,” the anti-tobacco group said.
Indeed, it could be argued low taxes on the industry with no provision for it to contribute to the cost of the health problems it s product causes amounts to a form of subsidy ideological market-fundamentalist groups like the CTF should logically oppose. Unless, that is, they view public health care as a misuse of tax revenues as well.
Regardless, since Alberta’s approach to contraband tobacco is effective, there would seem to be little “danger” of Central-Canadian-style illegal tobacco sales spreading to Alberta.
As to why the lobbyist chose to focus on Mr. Fildebrandt, that’s impossible to know. The Wildrose Party has a long history of being more sympathetic to Big Tobacco than the NDP, so perhaps it’s as simple as that.
Before entering politics, former Wildrose leader Danielle Smith worked for well-known right-wing organizations including the Fraser Institute that supported the tobacco industry’s fight against legislation to control tobacco and smoking. The Fraser Institute has received funding from the industry.
Mr. Fildebrandt’s CTF paper, Ms. Smith’s journalistic columns on tobacco taxes and the Fraser Institute’s commentaries all make the same arguments against high tobacco taxes.
From the perspective of those Albertans who feel the government’s anti-tobacco efforts have not gone far enough, though, it may be seen as a positive if Big Tobacco gives up on the NDP without really trying.
CORRECTION: Imperial Tobacco pleaded guilty to customs charges in 2008 and agreed to pay as much as $1.5 billion in fines and civil payments in connection with its role in aiding sales of contraband tobacco. Incorrect information appeared in an earlier version of this story.
This post also appears on Rabble.ca.