HANNAFORD: Blowing smoke in the budget

About the first thing the Trudeau Liberals did when they came to power in 2015 — after appointing a cabinet based on sexual equipment, that is — was to legalize the sale of marijuana. So, as we review the intentions underlying the last budget’s hike on cigarette taxes — $4 per carton of 200 cigarettes — we know that for all the moralising about getting people off smoking, they don’t really have a problem with people ingesting substances that “may be injurious to your health.”You might have thought that of course. By federal law, tobacco companies have been treated as so unspeakably evil that they haven’t been allowed to advertise for years, display their product openly or even sponsor racing cars..But, this government’s name is hypocrisy. And it is one of their many compromises between the glacial purity of policy they claim and the seamier outcomes they tolerate, that amid all this moral censure, cannabis stores are highly visible — more common than Starbucks, in fact — while regular tobacco is kept under lock and key behind the supermarket till.After Tuesday's budget, however, we must add to hypocrisy, the policy confusion that leads to perverse incentives.First, it seems to have been overlooked that the more one taxes something, the greater the likelihood that the people being taxed will turn to illegal alternatives.It should therefore be no surprise that people used to paying more than $20 for a pack of 20, will happily buy contraband ciggies off the reserve for half the price — or less.How much less? In pre-budget testimony to a House of Commons committee a few years ago, an anti-smoking group asserted that “a ‘baggie’ of 200 contraband cigarettes can cost as little as $8, $80-$100 less than the cost of a carton of legal product.”Not surprisingly, that trade has fallen into the hands of organised crime and the government was losing as much tax revenue as it was collecting — about $3 billion.Perverse incentive, perverse outcome.Second, and staying with the idea that ingesting tobacco smoke is bad for you, if you would rather people ‘vape’ than smoke Best Old Virginnie, what is the logic of ramping up the tax on that too?Think about it. Let’s imagine tobacco is totally bad for you. However bad it is, vaping is an order of magnitude less bad for you. So, if you, Joe Citizen, must ingest something, ingest what’s less likely to make you a charge on the publicly funded health system. And if you’re acting on behalf of the government that says it wants to get people to quit smoking because it’s bad for them, encourage the behaviour in Joe Citizen that is going to keep him out of the cancer ward. At the very least, don’t make the ‘safer’ alternative more expensive.But that's what Chrystia Freeland did on Tuesday, when she raised taxes on e-cigarettes by 12%, effective July 1st.At some point, the citizen-smoker says, “Why bother? No more of the substitute, I’m going back to the real thing.”Another example then, of perverse incentives at work.If this government were serious and consistent, they would risk the damage it might do to indigenous reconciliation and crack down on the illegal trade.Or, it could bite the bullet and simply ban nicotine. (And cannabis, which consistent with government favour, suffered no tax increase on Tuesday.) That would be a civil rights transgression of the first magnitude of course, but at least it would be consistent policy.However, here’s the ugly truth. They will never be consistent because for all their health-based rhetoric, Ottawa has its own nicotine addiction — nearly $3 billion in annual excise revenues.And so in their hypocrisy, we discover the roots of their gross stupidity.No surprise, is it?

HANNAFORD: Blowing smoke in the budget

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