BRANT/BRANTFORD – Bill C-10, which would force Native cigarette businesses to pay a foreign tax on products made on reserve and sold on reserve, is part of Prime Minister Steven Harper’s sweeping new plan to crack down on so-called “contraband” tobacco. Last week, we asked Brant Conservative MP Phil McColeman what his opinion of Harpers Bill C-10 was. Here is what he had to say about the matter.
TRT: What is Bill C-10?
MCCOLEMAN: This is a second iteration of a previous bill that came through the Senate in the previous Parliament and basically, the intent here is to crack down on contraband tobacco.
The statistics I have read say the vast majority of contraband cigarettes is smuggled in the Cornwall area, across the St. Lawrence. So, it’s the effort the government has been taking since 2008, since I have been in parliament, to deal with the volumes and the organized crime element as much as anything.
TRT: What is considered contraband? Is it tobacco that doesn’t carry the proper banding, or pay taxes to Canada, according to the Canadian government?
MCCOLEMAN: Yes, stamping is one part of it. Obviously any manufacturer that is not a registered manufacturer is illegal. Others that pay excise tax, as GRE does, are in compliance. They are a licensed manufacturer who pays excise tax on all the products they produce.
In a parallel situation, if there is a producer that doesn’t and isn’t registered legally to do that, they could be making and distributing contraband tobacco products. It also applies to raw leaf product in a sense that, if it’s not bundled and marked and registered, that is considered contraband as well.
TRT: So basically, it’s just a matter of which products have paid their pound of flesh in taxes so to speak?
MCCOLEMAN: Yes, if it’s been produced in Canada. As you know, there are legal manufacturers in Canada, GRE being one of them, but there are others who are operating without those government approvals. There are also contraband products coming in from other countries, primarily the United States, as in the case of what’s coming in across from Cornwall. If it’s not paid the excise duties, it is contraband.
There is also a fair amount of product, as I understand it, arriving at our borders coming in from China. According to RCMP reports, there are now up to 105 different crime organizations heavily involved in illegal contraband distribution. (NOTE: Mohawks are one of those “organized crime” organizations on that list.)
TRT: At Six Nations, there is concern that the Six Nations economy is being unfairly attacked by this taxation, which they consider illegal according to their constitution and traditional laws. With at least 1,000 families here at SN which depend at some level on the tobacco industry for a living, how does that line up with your government’s “Action Plan” to create jobs? If that were to dry up, now you have all these people out of work and unable to support themselves.
MCCOLEMAN: I think GRE represents the largest number of people employed on Six Nations in terms of a livelihood, and they are in compliance with regulations and the payment of the excise tax on tobacco. So, it’s a fairly simple process to go through the same process GRE has to become registered as a manufacturer and pay the excise tax. So those who choose not to are doing it illegally, and they should consider it. I spoke with some of the principals at GRE as they advocate and lobby in Ottawa for all Native cigarette manufacturers to pay the tax, so, those people who are employed there can continue to be employed there.
TRT: Some of your PC materials say that somehow health concerns are greater with Native cigarettes. What is the difference between a Native cigarette and a taxed cigarette as far as health is concerned?
MCCOLEMAN: There isn’t any. I’ve never seen any tax to have that effect, other than this. It has an indirect effect. If the product is priced at a rate of attracting users, cheap, that makes it pretty accessible to anybody to use the product and start smoking.
TRT: So if everyone agrees that smoking cigarettes is not good for you and is a health hazard, why not ban it completely instead of targeting Native cigarettes or using it as a giant tax grab?
MCCOLEMAN: That should be considered. A lot of people come to Ottawa and advocate for that. The government at the present time says no, that the distribution and the deterrents from smoking are through taxation and that’s what they have done.
TRT: From a Native perspective, tobacco is historically a trade item, and as such, by treaty, should not be taxed by the Canadian government and keep its hands off their economy and their trade.
MCCOLEMAN: Those are arguments that are constantly made in Ottawa based on historic treaty data through treaties, on tobacco products and all sorts of issues surrounding First Nations and Aboriginal People.
TRT: Those treaties were not made in Ottawa.
MCCOLEMAN: But people come to Ottawa, to Aboriginal Affairs regularly and that is the premise of their argument that Canada has no right to be involved with it in the first place. And my feeling is that Canada does have the right to be involved in it. We have put into place regulations around this and obviously it has been a big benefit to Six Nations where we have the largest cigarette manufacturer in Canada who believes that it is a good thing for governments to be involved in or else they wouldn’t be involved. To me, it’s a good thing.
TRT: But what about the treaties? You’ve recognized that there is provision in the treaties for the free trade of product to continue unhindered, yet you still believe the Canadian government should be involved with that?
MCCOLEMAN: Yes I do.