The price of cigarettes and drinking alcohol is rising, a move that will provide in $536 million in new earnings over the next three years to support Quebec in stabilizing its books.
Cigarette taxes are growing by 18%, Finance Minister Nicolas Marceau declared.
A pack of cigarettes will be priced at 50 cents more.
The higher tax became operational at 3 a.m. on November 21. Retailers were to begin charging the increased cigarette taxes at midnight on November 20.
The tax rate will climb to 12.9 cents per cigarette, up from 10.9 cents. It is the first cigarette tax hike since 2003.
The price of a carton of 200 cigarettes will rise by $4. The higher cigarette taxes will help lower smoking rates among Quebecers, which costs the health-care system an approximated $1.6 billion per year, Marceau stated.
About 20% of Quebecers are smokers, a rate that has kept stable in recent years.
“Increasing the cost of cigarettes is one of the most successful methods of reducing smoking rates,” Marceau said. Quebec believes the increases will encourage about 50,000 smokers to give up smoking.
The boost in cigarette taxes will provide in $43 million in extra earnings in 2012-2013 and $130 million more in the next two fiscal years, the government stated.
The news was supported by the Coalition quebecoise pour le controle du tabac. The anti-smoking group lauded the “considerable tax hike,” saying it will encourage many Quebecers to give up smoking and discourage young adults from starting.
Even after the increase, Quebec will continue to have the smallest cigarette tax of any Canadian province.
After the hike, provincial taxes on a cigarette carton will be $25.80 in Quebec, $30.20 in Ontario and $40.24 in New Brunswick. The average across Canada is $43.85 in provincial taxes per carton.
The government said it will control the market to find any increase in contraband and will make efforts to fight smuggling.
Quebec says it has considerably decreased cigarette smuggling in recent years.
Tax losses because of smuggling were calculated to be $125 million in 2011, a fall of $180 million in comparison with 2008.
Another sign contraband tobacco is reducing: income from tobacco taxes has risen even though the smoking rate is the same.
In 2011-2012, Quebec received $914 million in cigarette taxes; that’s $260 million more than in 2008-2009.