Thank you, Mr. Chairman. Mr. Chairman, the purpose of the An Act to Amend the Tobacco Tax Act is to change the rate of tax on tobacco, to strengthen the Act's enforcement and penalty provisions, and to make administrative changes. Mr. Chairman, the federal government's recent decision to change federal excise tax rates has created large differences in tax rates between western and central Canada and between southern Canada and the Northwest Territories. It is now possible to purchase a carton of cigarettes in Quebec and Ontario for approximately $23. Whereas the price in Yellowknife averages $47 per carton and in Iqaluit, $56 per carton.

Additionally, Mr. Chairman, because the NWT tax is based on the selling price of tobacco products, the federal government's decision will result in a loss of approximately $2.3 million in revenue to the Government of the Northwest Territories unless the rate of tobacco tax is changed. Mr. Chairman, our government has few choices. If we do not change our rate of tax the substantially lower price of tobacco products will most definitely lead to the increased use of tobacco products, increased health problems, and increased cost to government. On the other hand, if we maintain our tax levels on tobacco products without strengthening our legislation, we would expect to see increased smuggling activity.

Mr. Chairman, the proposed amendments to the act, therefore, include new sections designed to control the flow of cheap tobacco products into the territories. These amendments will permit enforcement officers to do search and seizures of smaller quantities of tobacco than was previously allowed. The amendments will require an importer of tobacco other than a person who is a collector, to obtain an import permit and will make it an offence to import tobacco without a permit. The amendments will also make it an offence for any person to possess tobacco products that are stamped, marked, sealed, or labelled for sale in another jurisdiction.

Mr. Chairman, it is also proposed that penalties be substantially increased, especially for repeat offenders. Consultation with the RCMP, the federal Crown attorney's office, and our Department of Justice lead us to believe these amendments will substantially improve the government's ability to enforce provisions of the Tobacco Tax Act.

Mr. Chairman, these amendments are needed to maintain our revenues, to ensure that our legislation can be enforced, to stop cheap tobacco products from being brought into the territories, to control consumption and decrease potential health problems, and to control the cost to government. Thank you, Mr. Chairman.