Canada fines tobacco firms for smuggling

OTTAWA, April 14 (UPI) -- The Canadian government has hit two major tobacco companies with $550 million in fines and civil damages related to 10 years of cross-border smuggling.

JTI-Macdonald Corp. and R.J. Reynolds Tobacco Co. agreed in Ottawa Tuesday to sign off on $225 million fines and the same amount in civil agreements to the federal government and provincial governments, which lost millions in tax revenue in the past decade, Canwest News Service reported Wednesday.

National Revenue Minister Keith Ashfield told reporters the combined settlement was "the largest amount ever levied" in the country.

The case involved a systematic shell game of cigarettes being manufactured in Canada, shipped to the United States duty-free and then being smuggled back into Canada where they continue to be sold on the black market for about one-third the price of fully taxed cigarettes.

Neil Collishaw, research director at the Physicians for a Smoke-Free Canada lobbying group, denounced the settlement as too small, telling the Globe and Mail the companies are paying their taxes "at 25 cents on the dollar."