Smuggling is a major problem for the Canadian distilled spirits industry. The Association of Canadian Distillers is working with the federal and provincial governments to stop the flow of illegal spirits into Canada.

Smuggling of illegal liquor, especially spirits, into Canada has been a problem for decades. The rise of taxes on spirits in Canada over the past 15 years has made it a very tempting and lucrative business to smuggle such products.

The average taxes imposed on spirits in the United States are 44%. In Canada, they are 83%. Such a differential combined with a consumer revolt against rising taxation in Canada has led to extensive smuggling activity in distilled spirits products.

Under the Excise Act, the penalty for unlawfully importing spirits ranges from $500.00 to $10,000.00 plus the confiscation of the smuggled goods and the potential loss of the vehicle used to transport the goods. In some cases, imprisonment of no more than 12 months may apply. This is a sizeable penalty for small-time smugglers but only a minor inconvenience for the large organized smugglers.

It is estimated that 50,000,000 bottles of spirits enter Canada illegally on a yearly basis. This represents more than $1 billion in lost economic activity and taxes. This amount does not include health care costs resulting from the consumption of tainted alcohol.

There is no way to determine what percent of the illegal pool of spirits meets stringent government quality and safety standards. What we know is that, of the spirits confiscated by various police forces and analyzed in laboratories, many fail to meet Canadian standards.

Standards relating to beverage alcohol products are regulated by the Health Protection Branch of Health Canada. Our members products are subject to these stringent federal standards of health, safety and quality. Smuggled goods aren't.

Spirits are smuggled into Canada in plastic antifreeze containers and gas containers. Rat poison has been found in some containers -- the funnel used to transfer the spirits from one container to another had not been cleaned after the storeroom's fumigation.

Canadians purchasing bootlegged spirits have no guarantee that the product they purchase is safe. Smuggled spirits present a real health threat whose cost implications are not factored into any equation.