The Canadian Taxpayers Federation is calling for an investigation into the sale of tobacco products on native reserves on the South Shore and elsewhere in the province.
The CTF has collected figures from a freedom of information request showing an 83% loss in tax revenue due to exempt tobacco sales and an increase of 8% in the total number of cigarettes sold on reserves from 2001 to 2010.
The federation's Atlantic director Kevin Lacey says if you consider the size of the native population and if the increased sales are to natives only, that would mean every man, woman and child on every reserve would be smoking at least one pack a day.
He suspects a lot of tobacco products are ending up on the black market and an investigation is needed.
Given that almost all tax-exempt tobacco is sold on Nova Scotia’s native reserves, the CTF made a freedom of information request (FOIPOP) to better understand why so much tobacco is being sold on Nova Scotia’s native reserves, and why it’s increasing.
The FOIPOP shows that tobacco wholesalers sold the equivalent of about 130 million tax-free cigarettes to reserves in the 2010-2011 fiscal year. Lacey says this number becomes even more staggering when you consider there are only approximately 14,330 status Indians in Nova Scotia who are eligible to purchase tax free smokes.
Lacey says there are two reasons why the Nova Scotia government should proceed with an investigation into tax-free tobacco sales.
One interpretation is that the numbers point to a potential health crisis among status Indians in Nova Scotia. If a significant portion of the tax exempt tobacco is actually being consumed by status Indians, their intake is extremely high and it could lead to serious health problems.
Second, given the numbers, its frankly almost impossible to believe that on a per-capita basis every man, woman and youth can consume 33 cigarettes a day or to think about it a different way, that every single Indian home is consuming 3 packs a day.
Lacey says given these numbers there’s potentially a significant portion of the tax-free tobacco bound for status Indians is actually being sold on the black market to non-Indians. The RCMP, in a 2008 study of contraband cigarettes, found that the Maritimes is the second largest consumer of contraband cigarettes in Canada.
Lacey asks: Why is this important?
He says the numbers suggest that the system designed to respect the rights of status Indians to obtain tax-exempt tobacco could be being abused. The lost revenue is then made up from other sources – ultimately, taxpayers! The province is running a huge deficit of over $300 million -- each and every dollar counts. This is an area that warrants investigation and reform, and the payoff could be huge.
