December 16, 1998
(Finance)

Government takes measures to maintain cost of tobacco products in Labrador border zones

Finance Minister Paul Dicks today announced an amendment to the Tobacco Tax Act which will help to ensure prices in Labrador border zones remain competitive with those of Quebec.

"This amendment ensures that tobacco tax rates in Labrador West and the Labrador Straits are competitive with the rates in Quebec," said Minister Dicks. "Competitive prices will help decrease cross border shopping by keeping business in the province. This will result in increased economic activity in the Labrador border zones by encouraging the sale of other goods and services."

Effective January 1, 1999, the rebate amounts have been set at $0.0803 per cigarette and $0.0614 per gram of tobacco. In Labrador West, a carton of cigarettes will cost $36.70; 200 grams of fine cut tobacco will cost $23.82.

The Tobacco Act amendment will give the minister the authority to adjust the amount of the tax rebate in the Labrador border zones. "This will result in an improved process," said Minister Dicks. "Each time Quebec changes its tobacco tax rate, this government will be able to quickly and expediently change our rates. This will enable us to remain on an equal playing field."

Government has made several changes to tobacco tax rates for the Labrador border zones as a result of a serious ongoing cross-border shopping problem. The new rebate mechanism is in response to a change in the way Quebec imposes its taxes on tobacco products. Since the Labrador border rebates are tied to the Quebec tobacco tax rates, this causes an increase in the effective tax rates in the Labrador border zones.

The minister said: "Government is restoring the amount of the retailer tobacco tax rebate in the Labrador border zones to the level it was prior to the Quebec tax policy change announced in June. The amendment we are announcing today allows us to respond to fluctuations in the tobacco tax rate or the QST rate in Quebec."

Media contact: Paula Dyke, Communications, 729-0329.

1998 12 16                           11:30 a.m.