December 2, 1999
(Finance)

Change on rebate rate for cigarettes in Labrador border zones

Finance Minister Paul Dicks today announced that the tobacco tax rebate rate on cigarettes will decrease in the Labrador border zones. The amount of tax imposed on cigarettes in the Labrador border zones is closely tied to the amount of tax imposed on cigarettes in Quebec. That province recently implemented a provincial tobacco tax rate increase of 60 cents per carton.

The rebate rate for cigarettes in the Labrador border zones will decrease from $0.0803 to $0.0776 cents per cigarette. The total tax increase, including the provincial component of the HST, will be 60 cents per carton, which is the same amount as the Quebec increase.

Mr. Dicks said: "This increase will ensure the current price differential between Quebec and the Labrador border zones will be maintained. This will continue to reduce the incentive for cross border shopping and encourages individuals to purchase from local retailers."

The new cigarette rebate rate for tobacco retailers will come into effect on December 3, 1999. There is no change in the rebate rate for fine cut tobacco.

The Labrador border zones include the towns of Labrador City and Wabush, and the coastal region extending from the Quebec border up to and including the community of Red Bay. These same areas currently have a special tax rate for cigarettes and fine cut tobacco, with a quota system in place to control the amount of tobacco products available at the reduced rate.

"The rebate and quota system has been extremely successful," said Minister Dicks. "It has helped to create a level playing field for businesses in the Labrador border zones. There is also evidence that the amount of cross-border shopping has decreased in the zones since the system was implemented in 1998."

Media contact: Paula Dyke, Communications, (709) 729-0329.

1999 12 02                4:20 p.m.