Labrador Border Zone Tobacco Tax Rebate to Be Eliminated

The Honourable Jerome Kennedy, Minister of Finance and President of Treasury Board, today announced that the Provincial Government will bring forward legislative amendments in the spring session of the House of Assembly to end the current Labrador Border Zone Tax Rebate on tobacco as of July 1, 2013.

“As part of expenditure reduction measures flowing from Budget 2013, we will bring forward legislative amendments to eliminate the Labrador Border Zone Tax Rebate,” said Minister Kennedy. “There is no other rebate provided in any other part of the province for tobacco sales and no other province offers a similar rebate. The elimination of this program will result in savings of approximately $3.4 million annually.”

Affected retailers have been given notice that effective 12:01 a.m. on March 27 tobacco purchases by retailers in the Labrador Border Zone are no longer eligible for the tobacco tax rebate because they have reached their annual quota.

A reduced tax rate on tobacco products was introduced in Labrador in 1984 at the request of retailers in the area. In 1997, the Labrador Border Zone rebate was linked with the taxation levels of tobacco products in Quebec in an effort to limit the incentive for cross-border shopping in the Labrador West and the southern coast areas of Labrador. The rebate is provided to approximately 33 retailers in Labrador West and the south coast of Labrador.

The Provincial Government has made several changes to legislation with a goal of discouraging tobacco use, including banning the promotion of tobacco products, eliminating smoking from bars and restaurants, and banning smoking from areas around government buildings. In addition to realizing savings, removing this rebate is consistent with those efforts.

“We are committed to the promotion of health and well-being in the province and providing a tax rebate that serves as an incentive for increased tobacco sales goes against this commitment,” said Minister Kennedy. “Since 1998, the amount of cigarettes purchased has more than doubled in the Labrador West region. With the end of the program, it is our hope that cigarette sales will also decrease.”

As part of Budget 2013: A Strong Plan, A Secure Future, the Provincial Government increased tobacco tax. Effective March 27, 2013 the tax per cigarette has increased by 1.5 cents, resulting in increased revenues of approximately $8 million.

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Media contact:
Tansy Mundon
Director of Communications
Department of Finance
709-729-6830; 693-1865
tansymundon@gov.nl.ca 

2013 03 28             1:50 p.m.