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Like any sales tax -- they hit the poor hardest, because the poor can least afford them. In this case, they are punitive.
Imagine a single senior cit living on the minimum fixed income -- just under $950 a month, counting all guaranteed income supplements etc. If s/he (statistically, "she") is lucky, she has a subsidized apartment (not too difficult to get in many areas) at 1/3 of income a month, leaving $600+ for other expenses. Nearly $100 a month for cable and phone; cable is really "essential" for an older person living alone and not able to afford any other form of entertainment.
If we take out of the remaining money a pack of cigarettes a day at $10 (which is what it's coming to), that's $300. Bad enough for a well-to-do person; horrible for a low-income person.
Cigarette smoking is an addiction, and in the case of people over 65 it is an addiction that was not prevented, and in some cases was actively contributed to, by the government (e.g. in the military during WWII). It is inappropriate to punish the people with the addiction by taking their money in the form of taxes.
High taxes are supposed to (and apparently do) reduce the incidence of smoking among children and young people. A laudable aim. One that could also be accomplished by raising the legal age for purchasing them and enforcing it even more strictly.
Cigarette smuggling, and selling smuggled cigarettes, is a crime. I really don't care whether it's being engaged in by white-collar executives (what's happened to the tale of the cigarette manufacturers being complicit in the smuggling of a decade ago?) or by low-income First Nations individuals. In point of fact, it isn't really "low-income individuals" engaging in these activities in First Nations communities, it is indigenous organized crime gangs whom the communities are terrorized by and generally don't want around.
First Nations people are exempt from taxes for themselves, not for purposes of trading with non-First Nations individuals or businesses, period. They simply are not entitled to exploit their tax-free status to assist others in circumventing taxes, or to compete with businesses that are subject to the rules. (First Nations people, by the way, are entitled to all the usual benefits of Canadian citizenship, including universal health care. And I'm strongly in favour of settling land claims, enforcing aboriginal rights like hunting and fishing, expanding self-government arrangements, adapting the criminal justice system to reduce its unequal impact on First Nations people, etc.)
Unfortunately, given the high rewards and relatively low risk of apprehension and punishment, cigarette smuggling, like drug dealing and illegal gambling operations and the like, is a crime that's difficult to combat by enforcement activities. The horror stories of what went on around Cornwall last time this was tried -- machine guns being fired from boats on the St. Lawrence into the community centre on the shore -- demonstrate the investment that people are willing to make, and risks they are willing to take, to smuggle and black-market cigarettes. Just like the illegal drug trade. The profits to be made make the risks worthwhile.
So count me against higher cigarette taxes, both because they are "morally" wrong, as a punitive tax on the poor, and because, while they may reduce certain harms (smoking among young people) they have the inevitable result of increasing other harms (creating new criminal activity, strengthening organized crime, causing violence in affected communities).
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