Tobacco tax rebate to be eliminated
Finance Minister Jerome Kennedy says the provincial government will introduce legislative amendments in the spring session of the House of Assembly to end the current Labrador border zone tax rebate on tobacco, effective July 1.
The minister says the move is part of the expenditure reduction measures in the 2013 provincial budget.
“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,” Kennedy said in a news release.
The release said, 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 crossborder shopping in Labrador west and the southern coast areas of Labrador. A rebate has been provided to about 33 retailers in Labrador west and the south coast of Labrador.
The province says it has made several changes to legislation with a goal of discouraging tobacco use, including banning the promotion of tobacco products, eliminating smoking in bars and restaurants, and banning smoking in areas around government buildings. It says, 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 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.”
The province also announced a tobacco tax increase in its latest budget. Effective Wednesday (March 27), the tax per cigarette has increased by 1.5 cents, resulting in increased revenues of approximately $8 million.