Shift in collecting tobacco tax will be fought

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First Nations people in Quebec refuse to accept the Quebec government's guarantee that a recent change on how tobacco taxes are collected in the province will not infringe on their rights.

Andre Corivelau, spokesperson for the Quebec minister of Finance, insists the change in the administration of the province's tobacco tax law is merely a way of ending tax evasion associated with the illegal trade in tobacco products. She said it will not interfere with the tax-exemption right of Aboriginal people stated in Section 87 of the federal Indian Act.

Chief Phillip Jacobs of the Kahnawake Mohawk Council is completely opposed to the change. He fears it's just another tactic the provincial government is using to limit the rights of Aboriginal people.

On June 23, the Quebec Sales Tax (QST) was combined with the product tax on all tobacco sales. For Aboriginal retailers, this means a requirement to pre-pay taxes on tobacco followed by reimbursement.

Prior to the change, there were two provincial taxes on tobacco. The tobacco product tax was collected in advance by manufacturers and wholesalers on all sales in Quebec. On reserves, this tax ensured payment to the government for cigerette sales to non-Aboriginal people, while enabling Aboriginal people to claim the exemption from this tax for their personal cigerette consumption.

There was also the QST. Aboriginal retailers were not required to pay this tax when they purchased tobacco products from wholesalers and manufacturers.

Analysts from the Department of Finance in Quebec say some Aboriginal retailers were selling QST-free tobacco to non-Aboriginal retailers. The non-Aboriginal retailers would sell to customers for full price, pocketing the profit and failing to report the earnings on income tax claims. There was more tobacco being shipped onto reserves than the population could account for.

Jacobs said Aboriginal people are paying the price for a scheme some non-Aboriginal people are involved in to make more money.

"They tell us this change is to stop non-Aboriginal people from buying tax-free products, but they are really targeting the Native people," he said.

Jacobs is one of many First Nations people to oppose the change. He fears this is only the beginning of an intrusion on the Native communities, but is optimistic the change can be reversed.

"It can be changed. We already made a declaration against it and we intend to continue to defend our rights."

Corivelau said the tax on tobacco products has been shifted to one area to ensure tax will be collected in advance. Retailers will be reimbursed for the money after submitting proof the tobacco was sold to Aboriginal people on reserves.

"The Native people buying cigarettes on reserves will be required to show identification to the retailer. They show a badge with a number given to them by Indian Affairs to prove they are Native. The retailer submits the numbers every month or so to account for the tobacco sold to Aboriginal people, and they will get cheques back," she said.

If the amount of tobacco shipped to a reserve isn't realistic compared to the population, the request for reimbursement of the tax can be denied.

"Having to prove we are Native is crazy. We are fighting to maintain who we are, not prove who we are," said Jacobs. "If we can't cut this one off, we're going to have problems to deal with. It's just the beginning of intrusion on our domain."