Canadian Cancer Society commends federal regulatory proposal for cost recovery fee on tobacco companies

OTTAWA, ON, Aug. 1, 2024 /CNW/ -The Canadian Cancer Society (CCS) strongly supports a federal regulatory proposal announced today to implement a cost recovery fee on tobacco companies, a measure that will require the tobacco industry to provide reimbursement towards the annual cost of the government’s tobacco control strategy. CCS has been calling for a cost recovery fee on tobacco companies for many years and strongly supports the measure.

Tobacco use is the leading preventable cause of disease and death in Canada, killing 46,000 Canadians each year, including about 30% of all cancer deaths. There are still 3.8 million people in Canada who smoke, representing 12% of the population aged 12+.

A cost recovery fee will put some of those costs back on the tobacco industry for the damages they cause, and at a later stage the vaping industry. Rather than the federal tobacco control strategy – known as Canada’s Tobacco Strategy – being paid for by Canadian taxpayers, a cost recovery fee would mean the $66-million-a-year cost is covered by the tobacco and vaping industry. The government has indicated that the cost recovery fee will be implemented in 2 phases – the first phase will recover the costs (perhaps about $50 million) of the tobacco part of the strategy from tobacco companies. The second phase will recover the costs of the strategy related to e-cigarettes. The government has not yet indicated the timing for the second phase, or the specific breakdown between the tobacco and the e-cigarette parts of the strategy. CCS urges that the second phase be implemented as soon as it is feasible.

“The tobacco industry caused the tobacco epidemic and should be responsible for paying for Health Canada’s costs of responding to the epidemic,” says Rob Cunningham, Senior Policy Analyst, CCS. “A cost recovery fee is a matter of tobacco industry accountability. It’s time that the tobacco industry paid up.”

In Canada, tobacco companies have implemented massive windfall price increases on average of $31.80 per carton of 200 cigarettes over the 10-year period 2014-2023 inclusive, resulting in incremental revenue of about $2 billion per year. The tobacco industry can easily afford to pay the annual fee to recover the costs of the federal tobacco control strategy.

“For decades the tobacco industry has gotten away with the costs they cause,” adds Cunningham. We urge the government to adopt the final regulations as soon as possible to ensure tobacco industry accountability.”

The regulatory proposal released today is subject to a public consultation ending October 10, 2024.

Today’s regulatory proposal follows Royal Assent on June 19 to Bill C-59, the Fall Economic Statement Implementation Act, 2023. This legislation contains the authority to adopt regulations requiring tobacco and vaping companies to reimburse Health Canada for the annual cost of the federal tobacco control strategy. This part of Bill C-59 received all-party approval and unanimous support from MPs in the House of Commons with a vote on May 28, 2024, of 318-0.

In the 2021 federal election, the platforms of the Liberal Party, Conservative Party and NDP each included a cost recovery fee on tobacco companies to recover the annual $66 million cost of the federal tobacco control strategy.

In the U.S., a cost recovery fee has been in place since 2009 to reimburse the Food and Drug Administration for its tobacco control budget, now US$712 million annually. Tobacco companies reimburse this amount to the FDA proportionately based on market share. The Canadian regulatory proposal would also see tobacco companies pay the fee proportionately based on market share.

About the Canadian Cancer Society

The Canadian Cancer Society works tirelessly to save and improve lives. We raise funds to fuel the brightest minds in cancer research. We provide a compassionate support system for all those affected by cancer, across Canada and for all types of cancer. Together with patients, supporters, donors and volunteers, we work to create a healthier future for everyone. Because to take on cancer, it takes all of us. It takes a society. 

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SOURCE Canadian Cancer Society