Quota slapped on smoke sales

Page 3

The British Columbia government slapped a quota on the amount of tax-free cigarettes retailers can sell to status Natives following a provincial appeal court ruling.

Retailers will now be limited to 1,000 cartons of cigarettes per month for tax-free sale, the B.C. government announced. Finance Minister Glen Clark said the measure will stem the $3.9 million monthly tax loss on tax-exempt items.

The decision reverses a 1991 B.C. supreme court ruling involving a Port Alberni band that had given retailers the right to sell unlimited quantities of gas and tobacco.

At that time, retailers were forced to pay taxes to wholesale suppliers and then apply for rebates based on what they sold to status Natives.

The supreme court said that system infringed on Native rights because it subjected them to the "uncertainty of a rebate system."

But appeal court Justices George Cumming and Michael Goldie reversed the decision, saying the government was not collecting taxes, only an amount equal to taxes.

Therefore, they reasoned they were not violating the Indian Act.

In a dissenting opinion, Justice John Lambert said the pre-payment scheme amounted to an indirect tax and was constitutionally illegal.

Before last year's supreme court ruling, the government used a tax-free sales

quota based on 10 cigarettes per day for every status Indian living on a reserve.

The government has tax agreements with 170 bands.