Saturday 25 September 2010

A Canadian tobacco hypothesis

Hypothesis: Punitively high Canadian tobacco excise tax rates have nothing to do with health or Ramsey, and everything to do with economic development on Indian Reserves.


Almost 700 kilometres away at Six Nations territory in southern Ontario, another fenced compound -- just down the road from the site of a new tribal police headquarters -- harbours more unmarked tobacco factory buildings. A security guard heads off an uninvited visitor and moments later another plant employee roars up in a pickup truck, politely making it clear the interloper is not welcome.

Such secretive plants are dotted throughout these and two other Mohawk communities in Ontario and Quebec, as many as 50 all told, according to estimates from police and tobacco-business insiders.

Their tax-free, dirt-cheap product is decried by antismoking advocates, non-native politicians and the mainstream tobacco industry.

The native product accounts for an estimated 30% of cigarettes smoked in Canada, and has dragged to a halt the steady, decades-long decline in smoking rates, critics say. They also represent $2-billion a year in lost federal and provincial revenue.

But on reserves grown accustomed to poverty, the factories are the heart of a solidly entrenched economic powerhouse, broadly supported and responsible for new mansions, nice cars and general financial wellbeing. In a striking reflection of the complex relationship between non-native governments and First Nations, they are often allowed to operate with virtual impunity.

"I look at the tobacco industry as the basis for a diversified economy for the Six Nations," said Bill Montour, elected chief of that community. "We want to be part of this whole idea called Canada, but we're not going to be coerced into saying 'Well, you've got to do it this way.' "

Edna Holyome, who owns a smoke shop at Six Nations that sells those locally made cigarettes, puts it more simply. "Tobacco," she said, "is our natural resource."
And why haven't the Revenuers stepped in to do anything? Ah, right:
Past confrontations like the 1990 Oka crisis near Kahnawake and the Six Nations land-claims dispute near Caledonia make the idea of ending the business by force less than palatable for any outside government.

"There is no real push, there is no real force that is trying to stop this industry because, honestly, if they do come in, there's going to be another crisis," said Steve Bonspiel, editor of Kahnawake's Eastern Door newspaper. "It will be defended ... Any attack on the industry is an attack on the community, is an attack on our rights."

The economic benefits are readily apparent, though have also created tensions.

All the factory owners at Six Nations are millionaires, said Ms. Holyome, part of a new commercial association. And everyone who makes money from the business has to buy a new car, she laughs, from Cadillac Escalades to Hummers and even Porsches.

"Today, we're known [to neighbouring Quebecers] as the Hummer people," Tim Jay Montour, a tobacco wholesaler at Kahnawake, said with a grin. "People have pride when they have money. It's changed us from a one-horse town to a boom town."
The complete series, with links to the Mohawk internet gambling initiatives, is well worth reading.

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