If we define shareholders in companies as those who have rights to the residual revenues of the companies, governments in Canada are by far the largest shareholders of tobacco companies. Soon we may follow the American example of extorting money through the courts. The first province in Canada to follow the American example was British Columbia. The provincial government introduced Bill 37, the Tobacco Damages Recovery Act in 1997. The Act said that the provincial government may go to court to recover costs from tobacco companies of providing health care to smokers.
Torts have allure because they remove the upper limit to tobacco taxes that smugglers impose.
A tort ruling forces tobacco companies to pay provincial governments directly. Tobacco companies then recover their loss on wholesale to retailers. Smuggling thrives only when there is a gap between wholesale and retail prices, such as might exist with direct tobacco taxes. Torts make the gap disappear and as such are an ideal means of taxing tobacco companies and cutting smugglers out of a cut of government revenues. Please report any dead links or technical problems.