July 2, 1998
(Finance)

Tax rate on fine cut tobacco reduced in Labrador border zones

Perry Canning - MHA Labrador West announced today on behalf of Finance Minister Paul Dicks that the tax rate on fine cut tobacco will be further reduced in Labrador border zones, effective immediately.

"Government has decided to reduce the tax rate for fine cut tobacco from 2.92 cents per gram to 1.90 cents per gram," said Mr. Canning. "While the tax rate on fine cut tobacco in Labrador border zones is currently lower than other parts of the province, this further reduction makes the tax rate in the Labrador border zones equal to the Quebec rate, reducing cross border shopping, and thereby benefitting both retailers and consumers in the affected areas."

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, with a quota system in place to control the amount of tobacco products available at the reduced rate. Fine cut tobacco will be included in the current quota allocations. Consistent with current practice, the reduced rate will be administered by means of a rebate to retailers.

This tax rate reduction will reduce the cost of fine cut tobacco by about $2 per 200 gram tin.

"When people go across the border to buy tobacco, they buy other commodities, as well," said Mr. Canning. "If people spend their money in Quebec, they don't spend it at home, and that affects the economies of southern and western Labrador. This tax reduction will address that concern."

Contact: Perry Canning's Office, (709) 729-0264 or Paula Dyke, Communications, Department of Finance, (709) 729-0329

1998 07 02                     4:25 p.m.