"With one in four Canadian aboriginal children living in poverty, and over 50% of native people on reserve unemployed, aboriginal communities understandably are desperate to raise their standards of living. Unfortunately, for a number of reserves in Quebec and Ontario, the road to self-sufficiency has taken an illegal turn.

In a National Post investigative series beginning today, journalist Tom Blackwell explores the hidden world of the contraband tobacco business. As he reveals, its impact both on and off native reserves is detrimental to public health, safety, and, ultimately, the communities themselves.

What fuels the demand for bootleg tobacco? High taxes imposed by federal and provincial governments. As of July 1, the price of a legal carton of 200 cigarettes, including tax, varied between $70 and $106, depending on the provincial or territorial tax rate. Meanwhile, the same quantity of illegal cigarettes could be purchased for as little as six dollars.

The greater the price discrepancy between legal and illegal tobacco products, the more attractive the latter become. In 2001, under pressure from the anti-smoking lobby, governments raised taxes, with predictable results: Between 2001 and 2008, the sale of legal cigarettes declined more than the smoking rate: 31% vs. 25%. According to a study published by the Fraser Institute in July 2010, a 10% increase in the price of tobacco products can reduce lawful cigarette sales by 3% to 10%.

According to research compiled for Imperial Tobacco Canada, fully one in three cigarettes bought in Canada were contraband as of 2008 — up from one in six just two years before."

Get the Story:
Editorial: An economic cancer (The National Post 9/17)

Related Stories:
Series: The 'underground' tobacco industry on Mohawk reserves (9/22)
Series: The 'underground' tobacco industry on Mohawk reserves (9/21)