![]() The illegal nature of cigarette tax evasion makes it intrinsically difficult to measure accurately. ![]() A large proportion of illicit cigarettes are believed to originate from the Akwesasne/Saint Regis Reservations which border the provinces of Ontario and Québec and the state of New York, and the Six Nations Reserve in southwestern Ontario. 10 In Canada, contraband cigarettes are typically cigarettes sold on First Nations Reserves or through clandestine networks operating off-reserves, without the collection of federal and provincial taxes. In Canada, methods of tax evasion can involve illicit trade or production of counterfeit or genuine tobacco products (traditionally called contraband) without proper licensing. Tax evasion involves illegal methods of eluding tobacco taxes. 9 Tax avoidance by manufacturers includes changing their products and prices with the objective of reducing their tax liability. Tax avoidance by tobacco users involves legal purchasing behaviour such as cross-border shopping, duty-free shopping and internet purchases. 1–8 However, high taxes create an incentive for tobacco users, manufacturers and others, most notably criminal networks, to devise ways to avoid or evade tobacco taxes. There is overwhelming Canadian and international evidence that increases in tobacco taxes reduce tobacco use, save lives and increases government tax revenue.
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