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Province may face flood of contraband smokes after feds hike taxes

Some of the 800 thousand contraband cigarettes seized by provincial officials. Jeremy Desrochers

Provincial agents have made another huge seizure of contraband cigarettes: a job which may become more difficult after the federal budget yesterday that hiked tobacco taxes.

Members of the Manitoba Finance Special Investigation Unit, assisted by RCMP officers, seized 858,800 contraband cigarettes, a vehicle and a trailer on Friday, Feb. 7, according to a news release Wednesday.

The vehicle was stopped at 4:30 a.m. on the Trans Canada highway heading west from the Ontario border.

A 67-year old man and a 32-year old man, both of Fort Alexander were arrested and released. They face charges of possession of non-Manitoba marked cigarettes under the Manitoba Tobacco Tax Act and the Tax Administration and Miscellaneous Taxes Act.

“Manitoba stood to lose $249,052 in tax revenues should this tobacco have reached the black market,” the province says.

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Manitoba officials have made a number of similar seizures over the last few years, as rising taxes on tobacco products make the black-market trade in cigarettes more lucrative. On Wednesday, the Harper government boosted taxes on cigarettes by $4 a carton which could tempt even more smugglers to bring cheaper smokes from other jurisdictions into Manitoba.

The federal government has also boosted enforcement: the budget allocated $90 million for the RCMP’s anti-contraband tobacco efforts.

But provincial officials say that money will go only to federal enforcement efforts and won’t benefit provincial agencies like Manitoba’s Finance Special Investigations Unit.

The men caught with the latest shipment in Manitoba may face fines of $1,000 to $10,000 and/or up to six months in jail, as well as a “triple tax penalty” of $747,156.  They may also face charges under the federal Excise Act.

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Some of the 800 thousand contraband cigarettes seized by provincial officials.
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Some of the 800 thousand contraband cigarettes seized by provincial officials. Jeremy Desrochers
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Some of the 800 thousand contraband cigarettes seized by provincial officials.
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Some of the 800 thousand contraband cigarettes seized by provincial officials. Jeremy Desrochers

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