Aboriginal Entrepreneurs

"RCMP intelligence suggests that some of this surplus is being diverted, without detection by current control mechanisms, to the illicit market and transported to illegal manufacturers in and around First Nations territories in Central Canada."
Staff-Sgt. Greg Cox, RCMP spokesman

The locus of the illegal tobacco trade, where it all ends up and is available for sale at hugely reduced prices, because there has been no tax added, is at Indian Reserves on the border between the U.S. and Canada.  No one really wants to tackle the First Nations reserves, raiding cigarette plants there.  It is politically inexpedient.  Instead investigators focus on seizing U.S.-smuggled tobacco.

The idea is to fight organized crime involved in the trade.  Yet since organized crime encompasses Canada's First Nations living on reserves made profitable by this illegal trade, this represents operations that are gingerly embarked upon.  The idea being to target the other criminals, not the aboriginal ones.

Of course a similar situation accrues revolving around the illegal smuggling of guns and ammunition and of recreational drugs and alcohol.  Cheap at half the price.  Native leaders may not enjoy too much the idea of these illegal criminal activities on the reserves, but on the other hand, they are a means by which the residents are able to gain employment and live well.

There are also on these centrally located reserves - close to cities and towns crowded with 'white men' who must obey their national governments - other means of earning a living.  Casinos, for example, operate to great prideful acclaim and profit.  And pumping gasoline to any who drive across the border either way, at preferable and profitable prices.

Aboriginals living on these reserves enjoy advertising themselves as belonging to a separate 'nation', one that governs itself according to its own perceived values and customs and sees no need to pay taxes for any commodities to a federal government that walks on tippy-toes not to insult the heritage of First Nations peoples. 

But the malefactors that live on reserves have more than enough help from others who view the tobacco trade as one they too will exploit to their advantage, illicitly.  That they happen to be central-Ontario tobacco farmers whom government 'bought out' of the business is irrelevant in their opinion.  Having signed over ownership to a family member, tobacco is once again grown.

And huge amounts of it, with surplus that goes elsewhere than to legal sources, legitimate tobacco manufacturers who render due taxes for their product.  The raw leaf product considered surplus is discreetly sold to contrabond cigarette factories located on reserves. 

"If you cannot shut down the illicit manufacturing facilities, you have to address issues outside the reserve, and the best way to do that is by cutting off the supply of raw ingredients.  They're as guilty as the illicit manufacturers themselves", points out Francois Damphouse of the Non-Smokers Rights Association.

Which group recommends that the RCMP focus its attention on the suppliers of tobacco manufacturers; cigarette papers and filters, to the aboriginal-operated, unlicensed factories.  That contraband product accounts for roughly one-third of the cigarettes used nationally.  The concern of public health groups is the cheap tobacco undermining efforts to dissuade new smokers.

And governments are also impacted significantly with billions of dollars in tax revenues gone missing.  But governments also listen to messages such as those emanating from 'entrepreneurs' in the Aboriginal community, that the industry has brought prosperity to impoverished communities... and that kind of message is sacred to the public weal; the social good felt to supercede the legal bad.

The federal government has been hit with a double whammy on this one.  $280-million of taxpayer funding gone out to persuade  southern Ontario farmers to plant crops other than tobacco in what was considered to be a highly successful buyout program.  Then the farmers discovered the usefulness of leasing out their land to license holders they just happened to be related to.

The farmers collected the buyout package proceeds, and proceeded to continue planting tobacco on a family member's license.  That tobacco then ended up at the unlicensed reserve tobacco factories where no tax was rendered.  The farmers are doing all right; they're growing and earning double what they did before the buyout.

And the reserve factories are in fine fettle.  "The volume of domestic raw leaf tobacco being grown is increasing with no obvious market", according to an RCMP briefing note.  No obvious market is code for under the radar.  And as things stand at the present time no laws exist stopping a company from selling papers and filters to contraband factories.

Problem ... what problem?