Thank you, Mr. Speaker. Earlier today in my Member’s statement I made reference to a potential open door in the tobacco tax collection process. Specifically, the manual self-reporting remains portion of the GNWT tax. As stated, I have highlighted a potential problem which fails to ensure we are indeed getting the maximum tax of what tobacco comes into the NWT for sale. In order to put accountability and public trust into the system as it stands today, would the Minister of Finance consider having a one-source of distribution for all tobacco coming into the Northwest Territories so that we can ensure that all cigarettes are accounted for and that all taxes are collected?
Thank you, Mr. Dolynny. The honourable Minister responsible for Finance, Mr. Miltenberger.
Thank you, Mr. Speaker. The government’s internal Audit Bureau spent over 600 hours of man time to investigate the allegations that have been raised in regard to tobacco, and they reached the following conclusions, which I will quickly outline:
that there was a reasonable assurance that the GNWT was collecting the required tobacco tax revenue;
there was no evidence to support assertions that collectors were under-reporting their sales volume to the GNWT;
there was no evidence that the Northwest Company was incorrectly reporting sales to the NWT to avoid paying the higher tax rate; and
some small retailers were circumventing the NWT tobacco tax collection process by making purchases from an unlicensed wholesaler in Alberta.
Thank you.
I appreciate the summation, as I know I heard from the Minister before. But going back to the suggestion of a single distribution wholesaler in the NWT to mitigate this manual self-reporting structure as we see today, I think it’s a wise move on behalf of the GNWT and I think it’s also a smart business decision. I guess the question is: What’s holding the Minister back from considering a solution so we can put accountability and public trust back into the system?
We’ve spent a lot of time looking at this issue. There are a number of questions and areas, of course, for further discussion. Is the issue on the wholesale side and setting up a single wholesaler, or is it on the retail side, which is where I believe the problem is, and the issue of while we can have a good system like most laws in the country, which is why we have jails and police. If people want to try to circumvent the system, as they do with tobacco, there are many ways to try to do that. Our job, as the Member has indicated, is to try to make sure that we have as airtight a system as possible. I would, of course, look forward to continued discussions on this issue with the Member and committee, as we move through business planning processes, as a way to keep this issue under the magnifying glass for a thorough discussion. Thank you.
I do appreciate the Minister for his summation again here, but I don’t believe the Minister today is clearly seeing the potential for this exploitation, this manual remittance portion. It’s clear that there is a viable solution out there with a single-source distribution of a wholesaler and it appears that it’s just not in his language. At least it’s not in a language that I think will address the issue. I have highlighted a potential problem in our tax collection process, and in doing so, if the Minister isn’t going down this pathway, what measures will he put forward so that we can put accountability back into the system?
I could repeat the findings of the internal Audit Bureau, which has given me comfort that the system overall is working. Are there improvements? Absolutely. I’m sure if we had more resources and more ability, we could have more folks on the ground.
The issue of the one wholesaler, that’s one potential way to look at things. Will it deal with the issue of retailers? I’m not convinced that it will. Am I prepared to have more discussion? I am.
Thank you, Mr. Miltenberger. Your final, short supplementary, Mr. Dolynny.
Thank you, Mr. Speaker. I appreciate the Minister for leaning towards the direction of a single-source distribution centre, but to go further now, I believe that the issue being raised today puts some doubt in the way we’re doing our tobacco tax. In doing so, I’m asking the Minister: Could we have a whole disclosure to the House with the internal Audit Bureau so that we can prove beyond a reasonable doubt that we are indeed 100 percent confident that we’re collecting this tobacco tax, and would the Minister agree to reporting these findings to this House? Thank you.
Thank you, Mr. Speaker. The assertion initially was that we were missing up to $12 million to $15 million a year in lost tax revenue because of unreported tobacco sales. We put a significant amount of manpower onto that issue to follow up on that matter. As Finance Minister, the thought of us missing that kind of revenue, given our fiscal circumstances, immediately got my eye. We spent months doing the work. We’ve come back. The first finding is that there’s a reasonable assurance that the GNWT was collecting the required tobacco tax revenue.
The Member has some ongoing concerns. I’m prepared to look at and discuss those further. He’s made a suggestion. I don’t believe there’s a silver bullet that will provide the type of certainty that the Member asks for, and in the businesses that we’re in, I don’t think we could point to any that provides 100 percent certainty in anything we do. Thank you.
Thank you, Mr. Miltenberger. The honourable Member for Yellowknife Centre, Mr. Hawkins.
