TORONTO - Efforts to cut smoking rates among Canadians have stalled and the Canadian Cancer Society is blaming huge sales of cheap contraband cigarettes in this country.

Federal and provincial governments need to take action, including insisting that American authorities shut down illegal cigarette production operations on the U.S. side of the Akwesasne reserve near Cornwall, Ont., the organization said Monday.

Rob Cunningham, senior policy analyst with the cancer society, said the RCMP has identified the American side of Akwesasne as the most important source of illegal cigarettes sold in Canada.

"So it's essential that (Minister of Public Safety) Stockwell Day persuade his U.S. counterpart, the secretary of homeland security, to shut down the illegal operations on the U.S. side of Akwesasne," Cunningham said in an interview.

"These are not licensed as required by U.S. federal law. And they're the prime source of cigarettes that are smuggled into Canada. And if the reverse was occurring and there was widespread contraband in the U.S. originating from Canada, the U.S. government would insist that the Canadian government take action."

Figures released Monday by Statistics Canada showed that in 2007, 19 per cent of Canadians reported that they smoked either every day or occasionally. That figure is virtually unchanged from the rates in 2005 and 2006.

Earlier declines in people who smoke daily have also flatlined at 15 per cent, the statistical agency reported.

"We're very concerned that the decline in smoking rates has now stopped," said Cunningham.

"And the reason for that in our view is the widespread contraband problem that is providing access to inexpensive cigarettes. And that is impeding governments from increasing tobacco taxes."

The contraband cigarettes, made in unlicensed factories or "smoke shacks" on First Nations reserves, can sell for under $20 for 200 - the equivalent of a carton - compared to $70 to $95 per carton for legal cigarettes, depending on the province.

The RCMP's 2008 Contraband Tobacco Enforcement Strategy (http://www.rcmp.gc.ca//fio/tobacco-strategy-2008-e.htm overview), which outlines the problem, notes that federal and provincial taxes account for between 70 and 75 per cent of the cost of cigarettes.

The contraband cigarettes are sold tax-free.

The issue has garnered attention in Parliament, where a standing committee on public safety and national security held hearings on the problem in May. A federal government interdepartmental task force on the problem was also announced in May; it is due to report by the end of September.

Cunningham said measures like limiting the sale of tobacco filters to companies licensed to make cigarettes could help to stem the tide of cheap contraband cigarettes, often sold in plastic bags.

He noted Health Canada has a goal of lowering smoking rates to 12 per cent by 2011. "Unless we deal with contraband (cigarettes) there's no way we're going to get to that number," Cunningham predicted.