Richard Gleeson
Northern News Services

Yellowknife (Oct 04/00) - An unannounced tax increase means smokers are now paying 20-25 cents more for a pack of cigarettes.

Effective Oct. 1, the territorial tax on cigarettes increased from 12.6 to 13.6 cents per cigarette.

A treasury department official said the increase is expected to put an extra $370,000 in government coffers for the remainder of the 2000-01 financial year. Over a full year it will boost revenues by about $740,000.

The government expects to collect about $10 million in taxes on tobacco products this year.

Though expressed as amounts to retailers, tobacco taxes are, by regulation, to remain at 90 per cent of the cost of cigarettes to retailers. The 13.6 cents in tax paid on each smoke represents 90 per cent of the 15.19 cent retail cost.

"We do our calculations quarterly," said Finance Minister Joe Handley. "Because the price hasn't gone up dramatically, we haven't had (an increase) in two and a half years.

"The reason we do it now, is that the tax we're adding works out to about a cent per cigarette," Handley said.

"We don't want to be causing retailers to have to increase their prices because the price of a cigarette goes up a quarter of a cent."

The increase in the tax caught some retailers by surprise. At least two stores in town were not aware of the increases.

Loc Nguyen of the downtown Reddi Mart said he would have appreciated receiving more notice than he got. Nguyen learned of the tax hike in a letter from the government he received last Wednesday.

"Some customers asked about (the increase from $7.50 to $7.75 per pack)," said Nguyen.

"I just showed them the letter, but that's why I would have preferred if the letter came a little earlier, so I could explain it to my customers."

Cigarette retailers owe the government one cent for each cigarette they have on hand as of Oct. 1. Retailers are required to give the government an inventory declaration by Oct. 20.