Wherever the Road Leads

Lepers, Smokers and Taxes

Enough is Enough

I’ll be the first one to complain about cigarette smoke. I’m glad smoking is no longer allowed in restaurants and most indoor public venues… malls, movie theaters, airports, arenas etc. I used to belong to The Lion’s Club and we sponsored a weekly bingo in the local small-town Community Center. Entrance must have been restricted to smokers only as by the end of the evening, you had to go home, stand inside the front door, take off your clothes and burn them. Then take a shower.

Enter the government. One government arm, concerned with health, is discouraging smoking as it will kill a smoker. The other concerned government department, concerned with revenue, is taxing the smokers to death. Between the two departments, smokers are getting treated worse than rented mules. Lepers in the Bible were better off.

In Ontario, it is illegal to sell cigarettes wherever there is a pharmacy. Most grocery stores have pharmacies, therefor cannot sell cigarettes. Obviously the pharmacy chains cannot sell them. That leaves corner stores (‘convenience’ stores, ‘party’ stores, 7-11 etc) and gas stations to sell cigarettes. Well, when was the last time you got a bargain at a Shell-Mart?

A carton of 200 cigarettes in the Toronto area costs $108.00

I shouldn’t, but I am astounded at how a provincial government, as heavily taxed as Ontarians are, can have a shortfall in Taxation Revenue. In typical government fashion, areas are sought to increase revenue, perish the thought they might consider decreasing spending. The Ontario Minister of Finance has declared that in a measure to increase tax revenue, there will be a crackdown on the consumption of ‘illegal’ cigarettes.

With all due respect, Mister Minister, stick your hand outside, see if it’s dark.

A year or two before I left Canada in the early nineties, the Federal Government imposed an onerous tax on cigarettes that,¬†overnight, increased the prices dramatically. As the expression goes, ‘necessity is the mother of invention’, and Canadians found a way to circumvent the tax, making millionaires out of many Native Indians.

By statute, Indians do not pay tax. A few, and then a horde, found a way to become very rich thanks to the government’s single-minded greed. There was an Indian Reservation somewhere between Kingston Ontario and Montreal Quebec on the American/Canadian border that straddled both countries. The Indians on the American side of the Reserve would order a truckload of brand-name Canadian cigarettes, which they received without paying tax, including Canadian Excise Tax as the cigarettes were destined for outside of Canada.

The Indians would then set up store on the Canadian side of the Reserve, selling hugely-discounted cigarettes, given that there was no tax. Groups from the nearby-to-me Six Nations Indian Reserve outside of Hamilton Ontario would drive to the Montreal Reserve and return with a car load of cheap cigarettes. They set up a construction trailer on some rented land inside the Reserve and opened for business as a cigarette store.

They did a Land Office business selling to all the non-Natives who came in to buy a carton for $30 instead of $70, fully taxed, off the Reservation. The Federal Government wrang their hands and gnashed their teeth over the issue, rescinding the onerous tax in the end.

These days, at $108 per carton, things have changed only nominally. The Natives have branched out and have their own brands of cigarettes manufactured for them. Today, you can drive to the Reserve and may not be able to get a carton of Marlboro Menthol, but you can get a carton of Reserve equivalent. For $20.

This is what the Ontario Minister of Finance wants to crack down on. How? I’m not sure as I don’t think any Ontario Law Enforcement Unit has jurisdiction on an Indian Reserve. The Ontario Provincial Police may lay in wait for ‘entrepreneurs’ like I could be.

I could take a couple of thousand dollars out of the bank, drive down to the Reserve to purchase a hundred cartons of Indian cigarettes, load them into my pickup truck and return to the Toronto area. It would not take long for the word to get out and I would have a steady clientele rapidly, eager to shell out ‘only’ $40 for a carton of cigarettes.

If I buy 100 cartons at $20 then sell them for $40, that’s $2,000 profit, less gas and wear and tear, let’s say $200, equals $1,800 per week that I would be making.

If the Provincial Police started checking pickups coming off the Reserve, I’d find a back road instead of the main highway. If that didn’t work, I’d organize a band of ‘chauffeurs’. I’d have an Indian meet me at a coffee shop two miles off the Reserve. He would drive us onto the Reserve, I’d purchase the cigarettes then he would drive us off the Reserve and past the Police, onward to the coffee shop. (I have a bed cover over the bed of my truck. You can’t see in.) Let’s say I paid him $100.

An additional expense to me of $1.00 per carton would be passed on to my customers, bringing the price per carton up from $40 to $45. The Minister of Finance hasn’t increased his revenue, he’s increased mine, and my smoking customers are still getting a good deal.

“Usury” is defined as ” the practice of making unethical or immoral monetary loans intended to unfairly enrich the lender. ” In Canada, ‘usury’ begins at 60%. (In the United States, I thought ‘usury’ began at 32% but it is State regulated and I can’t find data.) What percentage is the tax when a carton of cigarettes can be retailed for $20? Let’s double that and assume $40 for brand-name. Yet the after-tax cost is $108? That’s 170% tax.

Would someone explain the ‘moral and ethical’ difference between 60% usury and 170% tax? Has no one in the Finance Department read The Goose that Laid the Golden Egg?

I wish that was all that had befallen the Lepers this week.

 

The City of Toronto is banning smoking in restaurants’ outside patio areas. Just when does government intervention become personal intrusion? Okay, thank you for banning smoking inside the restaurant. I know that if I want to enjoy my meal outside on a warm, sunny day, that I will have to share the space with smokers. Fair is fair. How long does outside dining season in Canada last, anyway? Two months, maybe three?

Now to dictate that people can’t smoke outside?

No wonder the internationally-infamous Rob Ford is such a popular politician. He may have more than his share of personal problems but he seems to have some – much needed in this city – common sense.

commonsense

 

 

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