11/17/2014 12:48 EST | Updated 01/17/2015 05:59 EST

Ontario Fall Economic Update: Illegal Cigarettes, Underground Economy In Sousa's Sights

JOEL SAGET via Getty Images
Picture of cigarettes taken on September 25, 2014 in Paris. France unveiled on September 25 a raft of new measures to crackdown on tobacco and electronic cigarettes including the introduction of plain cigarette packaging and the ban on electronic cigarettes in certain public places, in a bid to reduce high smoking rates among the under-16s. AFP PHOTO JOEL SAGET (Photo credit should read JOEL SAGET/AFP/Getty Images)

TORONTO - Ontario's Liberal government is vowing to crack down on illegal cigarettes, the underground economy and corporate tax avoiders to eliminate a $12.5-billion deficit in three years as promised.

In the fall economic statement to be delivered this afternoon, Finance Minister Charles Sousa will announce the province's efforts to, as he calls it, "strengthen revenue integrity" would generate an additional $700 million over four years.

Ontario will target contraband tobacco, which accounts for up to 40 per cent of the cigarettes sold in the province — taking a huge bite out of government tax revenues.

Contraband cigarettes sold in bars and out of the trunks of cars sell for a fraction of the $85 average retail price for a carton of 200 cigarettes in Ontario.

The Liberals will also announce that all companies bidding on Ontario government contracts must have their taxes paid up to date, and will unveil a plan to reduce "cash-only" transactions to help protect consumers as well as collect appropriate taxes.

The provincial budget wasn't passed until July, so the fall economic update will not include any new tax measures or other major changes.

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