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April 05, 2021

Is it time to clamp down on cheap off-reserve smokes?

A native-run discount smoke shop in western Manitoba has reignited the debate over tax-free smokes.

Last month, officials seized $10,000 worth of contraband cigarettes, which were not authorized for sale in the province. The next day, Dakota Chundee, which doesn’t sit on reserve land, was open again, crowded with non-Aboriginal buyers.

The smoke shop has been selling untaxed cigarettes, which come from Mohawk distributors from Quebec, for $40 a carton or $5 a pack, less than half the regular price in Manitoba.

The raid, and subsequent reopening of the smoke shack, is the latest in a growing frontier war between First Nations and western provincial governments. There's nothing illegal about natives selling tax-free cigarettes to other natives on the reserve. It's when they end up off-reserve that's causing the problem.

This is old news in Ontario and Quebec, where the booming Indian tobacco business has already meant billions in lost taxes, but Indian cigarette sales haven’t really been an issue in the West.

That’s changing as western bands turn to smokes to not only fill their coffers, but to assert land claims, too.

The provincial tax treatment of tobacco sold on-reserve varies from province to province, but the federal Indian Act is subject to interpretation, thus requiring courts to make tricky decisions about who can sell rollies, and where?

Do you, or people you know, buy discount smokes? Do you see anything wrong with this?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...