TORONTO - The Ontario government is supporting illegal activity and allowing tax evasion by turning a blind eye to the growing problem of illegal cigarettes, Progressive Conservative critic Toby Barrett charged Tuesday.

Barrett said he's seen an increase in illegal smoke shacks popping up around the Caledonia area of his riding -- including an operation set up on Hydro One land -- but the province and the police have failed to step up and close them down.

"We see the police taking very little action, whether it be national police, provincial, or Six Nations police," said Barrett.

"When they do take action they are confronted by these people and have to back down."

In an open letter last week, Barrett charged that "government inaction justifies participation in the illegal trade and suggests to some that tax evasion is tolerated."

He stood by those comments Tuesday, saying: "It is a fact -- half the people in Ontario are not paying taxes when they purchase their cigarettes."

In June, the government passed into law amendments to the Tobacco Tax Act, giving the courts authority to suspend the driver's licences of anyone caught with illegal cigarettes in their car, and allowing the seizure any possible evidence during a bust.

But, Barrett said, that legislation is not being enforced.

He's also calling for lower taxes on tobacco, noting that consumers can purchase baggies of 200 contraband smokes for as little as $6 to $8 -- less than the price smokers pay legally in the corner store for only 20 cigarettes.

"We see this with certain laws, if it's a bad law, by and large, people don't obey it and law enforcement personnel seem to let it go by," he said.

"Maybe society has come to the conclusion that taxes on tobacco are too high."

A spokeswoman for Correctional Services Minister Rick Bartolucci said the province believed police forces had done a good job cracking down on illegal cigarettes, noting that responsibility is shared with the federal government, since most of those cigarettes come from the United States.

"While border enforcement is the jurisdiction of the federal government, Ontario will continue to help stop the flow of illegal tobacco," spokeswoman Jennifer Kett said in an email.

"We also encourage the federal government to fully implement its Contraband Tobacco Enforcement strategy announced in May 2008."

Ontario's auditor general said in December that the province missed out on $500 million in lost tobacco taxes, and he blamed a lack of political will to deal with the issue.

Opposition parties joined the call to action, saying the government must crack down on illegal smoke shacks operating near reserves, including three near the Six Nations reserve in the Caledonia area, the site of a long-running occupation of a former housing development by aboriginal protesters.

But Premier Dalton McGuinty shifted the blame to the federal government, saying a large part of the problem is centred on aboriginal reserves that are Ottawa's responsibility.

Ontario has already banned smoking in vehicles with a child present, and it's been outlawed in workplaces and in public areas such as bars and restaurants.

Those changes may have made Ontario a leader as far as the restrictions on tobacco, said Barrett, but they "mean nothing when 50 per cent of the tobacco sold is illegal."