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Activists argue against financial settlement with tobacco industry

Physicians for a Smoke-Free Canada wants governments to take over the cigarette industry and running it as a non-profit with its own disappearance as a planned goal
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Manitoba Premier Wab Kinew appeared to signal early in May that the provinces were moving toward a financial settlement with tobacco companies — but that would miss a historic opportunity to wind up the cigarette industry, anti-tobacco activists warn. 

A lawsuit launched by several provinces, including Ontario, has ground on, apparently unresolvably, since 2009. It seeks to recover the costs of medical care related to tobacco use in the past and anticipated use in the future from Canada's three large tobacco companies. Between them, the provinces are seeking about $500 billion. Ontario's share of the claim is $330 billion, more than one and a half times the provincial budget. 

In recent years, as the tobacco industry negotiates with the provinces, judges have granted a series of six-month stays, or pauses in the litigation. After a dozen of these stays, the most recent issued on March 25, it's seemed less and less clear whether it will ever be resolved. 

Ontario's Ministry of the Attorney General has not responded to requests for comments on the issue. 

On May 5, Kinew told an NDP event in Winnipeg that he expected Manitoba's share to be in the range of hundreds of millions to about half a billion dollars, that the money would arrive this year or early next year, and the province planned to use it to fund a provincial cancer centre. 

The Canadian tobacco companies have about $12 billion set aside to fund a possible settlement. Assuming that that was divided up in shares by population, Manitoba's would be $433 million, and Ontario's would be $4.68 billion. 

That amount of money looks tempting, but accepting it means writing off a historic opportunity to destroy the cigarette industry, activists warn. 

"It's the worst outcome that we thought could happen," Flory Doucas of the Coalition québécoise Sur le contrôle du tabac says of a possible financial settlement. "The industry's back is against the wall."

"The smell of money makes people sometimes forget the real ethics of what's at play."

Cynthia Callard of Physicians for a Smoke-Free Canada argues for an alternative and more muscular plan that would involve governments taking over the cigarette industry and running it as a non-profit with its own disappearance as a planned goal, within a 10-to-15-year time frame. 

"Fifteen years down the road, a lot of smokers will have quit, and a lot of them will have died. What this is focused on is making sure that they're not replaced because there's no incentive to replace them, and there's a reduced capacity to replace them.

To start with, cigarettes could be made less pleasant to smoke.

"Tobacco companies perforate the filter so that air comes in more easily so that it's easier to inhale," Callard explains. "They adjust the pH so that it's more pleasant, less unpleasant to inhale."

"If they were directed to reduce the number of cigarettes sold every year, and if there were penalties if they fail to meet those challenges, then they would be in a position where they could reverse engineer their cigarettes in ways that made it more likely for people to stop using a period of years."

There is also room to increase cigarette taxes, Doucas says. 

"The cost of a pack of cigarettes in Australia is more than it is — way more than it is — in Ontario and Quebec."

This would not be a short-term process, Callard explains. 

"You have to deal with the psychological and social embeddedness of tobacco use. So you can't just flip off the switch, but you can ramp it down. Essentially, what it does is it stops the intergenerational transfer of nicotine addiction and the ongoing recruitment of new people."

Governments do get tax revenue from cigarette taxes — about $7 billion a year between Ottawa and the provinces combined, Callard says. But Doucas says that this has to be set off against smoking's costs to the health care system. 

"The money generated by taxes is still lower than the annual health care costs," Doucas says. 

"(Arguing that governments would be out of pocket) is a false understanding, because it doesn't even cover direct health care costs, let alone like the direct and indirect costs, of loss of productivity."

In the mid-1990s, a hike in tobacco taxes appeared to lead smokers to buying more cigarettes from the illicit market, often involving smuggling from the U.S. Some have argued that with higher prices, smokers just shift to the black market, depriving the government of tax revenue while not reducing smoking rates. Others say that while increased taxes do drive some smokers to the black market, overall it reduces smoking in general. 

"The contraband market is a competitor," Callard says. 'It's an accelerator of murder, an accomplice of it, because the contraband market keeps continuing the availability of cheap cigarettes, keeps people smoking, who, if cigarettes were only expensive, would quit."

"Contraband could undermine (the wind-down process) or drag it down or make it slower, but that doesn't mean that it would make it ineffective."

Ontario should "urge provinces to work together to phase out this industry whose business model is based on addiction and harm," Doucas argues.

Will a plan this ambitious happen? Callard sounds pessimistic. 

"Some of the pushback is just from a public health community that's comfortable with a style of progress, and which, generally speaking, is wary of doing anything that seems to be challenging.

"It requires someone at cabinet to want to make it happen, and there's never been that kind of imagination."

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Patrick Cain

About the Author: Patrick Cain

Patrick is an online writer and editor in Toronto, focused mostly on data, FOI, maps and visualizations. He has won some awards, been a beat reporter covering digital privacy and cannabis, and started an FOI case that ended in the Supreme Court
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